Sigma Lithium fights Brazil ruling after shares slide

Sigma Lithium (Nasdaq: SGML) is appealing a Brazilian court ruling tied to allegations involving waste disposal at its Grota do Cirilo lithium operation after the developments helped wipe 15% off the company’s share price.

The May 17 decision by a local judge in Aracuai, in Brazil’s Vale do Jequitinhonha region, includes potential legal collateral of $10 million that would only become payable if the company ultimately loses following appeals through Brazil’s state and federal courts, Sigma said. 

The company said similar cases in Brazil typically take years to resolve and no payments are currently due. The ruling followed a site visit by legal authorities who verified the operation complied with Brazilian environmental regulations, Sigma added. More than 200 people from nearby communities also attended a public hearing the same day in support of the mine, the company said.

“The company is the target of fake news and coordinated misinformation campaigns intended to damage its reputation and market value,” Sigma said, adding it remains in contact with authorities including FINRA regarding the matter.

Company shares closed Monday down 12.25% at $14.76, giving Sigma a market capitalization of about $2.6 billion. The stock fell another 1.76% in pre-market trading Wednesday to $14.50 a share.

Sigma’s Grota do Cirilo is Brazil’s top lithium producing mine that helped establish the country’s hard-rock Lithium Valley as a significant lithium district. The claims against Sigma could challenge its “green lithium” methods at Grota do Cirilo, which include dry-stacked tailings, recycled water and renewable hydroelectric power.     

Waste pile scrutiny

Reports earlier this month alleged Brazilian labour inspectors fined Sigma for depositing waste on a pile that authorities had previously shut down over what they described as grave and imminent risks to workers and nearby residents. Three waste piles were suspended in December, though inspectors reportedly alleged trucks continued depositing material on one of them in mid-May. Reuters reported a labour inspector cited a “partial rupture” at one pile near a school in Poco Dantas as evidence of structural concerns.

The dispute comes as Sigma pushes ahead with expansion plans at Grota do Cirilo, which the company describes as the world’s fifth-largest industrial-mineral complex for lithium oxide concentrate. The operation currently has nameplate capacity of 270,000 tonnes annually, while a stage two expansion aims to lift output to 520,000 tonnes per year.

The controversy also highlights growing scrutiny facing lithium developers in Latin America as governments, regulators and communities demand tighter environmental oversight while producers race to meet battery-material demand.