Sigma Lithium wins appeal in Brazil, removing $10M legal order

Sigma Lithium (NASDAQ, TSXV: SGML) says it has won an appeal in Brazil overturning a lower-court decision tied to the environmental impacts of the company’s mining operations.

In a press release issued on Tuesday, Sigma said a Minas Gerais state court has reversed an earlier decision by a local judge in Aracuai related to allegations of irresponsible waste disposal at the Grota do Cirilo lithium operations.

By winning the appeal, the company has removed a potential $10 million legal collateral included in the May 17 lower-court ruling.

The Aracuai court previously required Sigma to comply with certain precautionary measures sought by state prosecutors over alleged environmental impacts of its mine operations on nearby communities.

However, the Minas Gerais appeals court asked Sigma to hire an independent technical advisory firm to monitor these environmental impacts on these communities, with which the company complied.

After reviewing 12 months worth of environmental data on dust, noise and vibration, which Sigma said were independently collected and verified by external experts, the court ruled in favour of the company.

‘Baseless claims’

The allegations against Sigma came after reports last month that Brazilian labour inspectors fined the company 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.

The data-based defence presented by the company debunked the claims made by local prosecution and was accepted by the state court judge, Sigma said in its statement on Tuesday.

Sigma Lithium’s shares jumped as much as 5% on the news, before paring most of its gains. The company has a market capitalization of C$2.2 billion ($1.6 billion).

The court win removes a potential obstacle to the company’s expansion plans at one of the largest hard-rock lithium projects in the Americas. Located in a region dubbed as Brazil’s lithium valley, the Grota do Cirilo operation has the capacity to produce 270,000 tonnes of lithium oxide concentrates annually. A Phase 2 expansion is being contemplated to nearly double the output to 520,000 tonnes.

Sigma has long advertised its lithium products as a “low-impact” source of the battery material. According to the company website, its Greentech plant, which has been in operation since 2023, combines the reuse of 100% of water, zero use of toxic chemicals, zero tailings and the use of 100% renewable electricity.