Sigma Lithium has halted all mining and processing at its Grota do Cirilo complex in Brazil after receiving a court order from Minas Gerais state environmental regulator FEAM. The shutdown began Wednesday following an electronic notice received the previous day, which barred state authorities from issuing new licences. The dispute centres on whether FEAM should have consulted Baú, a protected Afro-Brazilian community, before licensing the mine. The court ordered independent mapping to determine the distance between the community’s territory and the operation. Sigma maintains that its operations have not harmed the community and that the licences predate a November 2023 federal report defining the territory’s proposed boundaries. The company has kept its 2027 output target but delayed its rolling 12-month guidance by three months. Sales of lithium-bearing material recovered from stored tailings will continue, which Sigma says should generate enough cash to fund the company during the halt. Brazil’s National Mining Agency separately ordered Sigma this week to stop work in part of Grota do Cirilo because of an unspecified 'imminent risk'.
The halt reverses Sigma’s position on Monday, when it said operations were continuing normally and called reports that its licences had been suspended 'categorically incorrect'. The restart now depends on a federal appeals court ruling. BMO Capital Markets analyst Joel Jackson said the company's rating was lowered to 'market perform (speculative)' and its target price to $10 as it moves to the sidelines pending greater clarity on legal, safety, and environmental challenges. The company also signed an environmental compliance agreement with Minas Gerais, which included up to US$540,000 in fines and about $1 million of environmental work.
Sigma produced 35,400 tonnes in the second quarter and sold 24,400 tonnes for $55 million in revenue. It reported $17 million in cash and $125 million in net debt at June 30. BMO’s Jackson cut his 2027 production estimate to 207,000 tonnes from 278,000 tonnes and his earnings forecast to $103 million from $194 million. He also delayed his assumed start of Sigma’s second processing plant to mid-2028 from late 2027.