The European Union's executive arm said it found that Hungarian authorities had incorrectly classified the red mud that burst out of the plant's holding reservoir as non-hazardous when the permit was originally granted.

The commission sent a letter to Hungary with its observations about the issue and is awaiting a response from Budapest, said Joe Hennon, the commission spokesman for environmental affairs.

"We're waiting for a reply from Hungary on the various points that we have made to them before we decide whether or not any infringement procedure is required," Hennon told a news briefing.

"We're not in a situation where we would take legal action but we wait and see what the Hungarian response is to our letter," he said.

The commission wants information on the construction permit and to find out if EU rules regarding hazardous material were respected, Hennon said.

A 2008 EU law, the Industrial Pollution Prevention and Control (IPPC) directive, imposes rules on authorising construction for industrial and agricultural activities with high pollution risks.

Ten people were killed and hundreds lost their homes and livelihoods after the plant's holding reservoir, some 160 kilometres (100 miles) west of Budapest, burst its walls on October 4.

The crack sent more than 700,000 cubic metres of toxic red mud spilling across an area of 40 square kilometres (15.4 square miles), polluting the Danube River and its tributaries and causing an ecological disaster.

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