Founders of Australia's only lithium-ion battery recycling plant are calling on electronics manufacturers — and governments — to keep battery waste out of landfill.

Inside the Envirostream factory at New Gisborne in Victoria, 200 plastic-lined drums are full to the brim with about 160 tonnes of flat batteries.

"They're in so many devices — we've got laptop batteries, power tool batteries, toothbrush batteries, car batteries, remote control batteries, telephone batteries," co-founder Andrew Mackenzie said.

"There's more coming because we don't have an electric vehicle market yet, we hardly have an energy storage market yet."

Mr Mackenzie and business partner John Polhill founded their recycling company last year, riding "a wave of batteries" they said would otherwise end up in landfill.

Research commissioned in 2015 by the Department of the Environment and Energy found lithium-ion battery waste could rise to 18,000 tonnes by 2018, and hit 154,000 tonnes a year by 2034.

Just three per cent of all batteries used by Australians each year were recycled, half of those by Envirostream.

Mr Mackenzie said he feared stockpiles of batteries left to languish could become as hazardous as tyre dumps.

In 2016, an Australian Battery Recycling Initiative submission to the Victorian Government reported at least two landfill fires in the state were believed to have been caused by lithium-ion batteries.

Mobile phone batteries were blamed for a factory blaze in the United Kingdom last month that took firefighters six hours to extinguish.

Treasure in the trash

Batteries come to Envirostream from waste transfer sites, community collection points at hospitals and via partnerships with Planet Ark and Mobile Muster.

They are then sorted by hand into battery types.

It's a painstaking but important task. Nickel cadmium batteries look identical to alkaline varieties, but cannot be processed at the plant and are sent offshore. Lead acid batteries are also passed on to another Australian processor.

The batteries that remain get shredded so the steel, copper and aluminium can be collected.

Piles of black dust, a mixed metal compound that contains the lithium, are also extracted, ready to be sold back to battery manufacturers.

About 95 per cent of the original battery can be recovered from the process.

Envirostream founders Andrew Mackenzie and John Polhill (centre and right) help an employee sort batteries according to their type. ( ABC Central Victoria: Mark Kearney )

Taking responsibility

Mr Mackenzie and Mr Polhill both said it was imperative a battery stewardship scheme was introduced, so manufacturers were compelled to collect and process batteries from their products.

A meeting of the country's environment ministers in April agreed to fast track a stewardship scheme for batteries and photovoltaic solar panels. The Federal Government was also undertaking a review of its stewardship laws.

The Victorian Government pledged at the last election to ban "e-waste" from landfill. That ban comes into effect from July 1 next year.

But companies should not wait for programs like those to take effect, Mr Mackenzie said, arguing there were economic advantages of using recycled materials sooner.

"Why, if you're a battery manufacturer are you happy for it to go to landfill when … you can get that product back, reducing your costs on your input streams," he said.

Some large-scale manufacturers, like Tesla, have taken the lead.

That company's co-founder, JB Straubel, told shareholders this month that all Tesla batteries were transported back to its US headquarters for recycling.

He said the goal was to eventually create a "closed loop" system that would see all the company's battery waste repurposed by Tesla.

"The discussion about … this waste ending up in landfills is not correct," he said.

"It is definitely something that will be a huge benefit in the long term to cost as we are able to process to more materials instead of mine more materials."

Local solution

Australian companies may no longer have a choice. Until recently, lithium battery waste was stockpiled and transported to China for processing.

But that country's crackdown on waste imports means there is little option but to find a recycling solution closer to home.

Mr Polhill said that was both environmentally responsible and economically beneficial.

800-kilogram barrels of lithium-ion batteries wait to be shredded at the Envirostream factory. ( ABC Central Victoria: Mark Kearney )

"We've got to get out of this habit of putting things in drums and in containers and sending them to countries to let them deal with our waste issues," he said.

"We need to invest in time and equipment and people here."

For Envirostream's owners, recycling seems as much a passion as it is a business model or environmental mission. They delight in being able to salvage the work of other engineers.

Inspecting a circuit board found attached to an electric drill battery, Mr Polhill sounds like he's describing a work of art, not a discarded power tool.

"We can appreciate the amount of effort, work and knowledge that's gone into making these products and when you see them just being discarded at end of life, it's just really sad," he said.