Brazil forces shutdown of Sigma Lithium waste piles, shares tumble

Brazil's Labor Ministry has ordered immediate closure of access to three waste piles at Sigma Lithium's flagship Minas Gerais mine, citing a "grave and imminent" risk to workers and nearby residents, documents and inspection reports show. The regulator action, coupled with earlier inspector findings of structural problems, has intensified legal scrutiny and sent Sigma's shares into a steep decline.

Labor inspectors recorded a partial rupture of one pile near a Poço Dantas school on Nov. 12, 2025, and a subsequent inspection on Jan. 6, 2026 dismissed Sigma's assurances that the piles were safe. Officials warned that a collapse could bury nearby homes or spill material into the Piaui River. The Ministry's prohibition prevents site personnel from accessing the three identified piles until Sigma demonstrates that the hazards have been remediated and verified by authorities.

The affected operation, variably named in reports as Grota do Cirilo and Nangarinho, is Sigma's only producing asset and has annual capacity of about 270,000 metric tons of lithium concentrate. Company filings and site documents indicate the mine has been inactive since October 2025 as Sigma works to restart production. The Ministry's order complicates those efforts by restricting use of key stockpiles the company says are required for operations.

Sigma has contested the emergency classification, telling inspectors the piles "only contain soil" and arguing that access limits would cause "significant operational and economic impacts" and jeopardize continuity of mining activity. The company also said the restrictions would not affect its ability to operate or to meet its schedule for resuming production. Regulators, prosecutors and independent experts have pushed back, citing gaps in company self-monitoring and the absence of independent audits.

An external geotechnical expert engaged by the Minas Gerais Public Prosecutor's Office presented a preliminary assessment in November 2025 that flagged structural safety concerns and questioned Sigma's waste management practices. Observers have referenced international standards on tailings and dust management, noting that the way Sigma classifies the material does not eliminate tailings-related risk under frameworks such as the Global Industry Standard on Tailings Management.

The market reaction was immediate. Sigma's stock fell roughly 12 to 15 percent in intraday trading after the regulator action and a subsequent Bank of America downgrade, erasing a significant portion of market value at a time when the company's market capitalization was roughly $1.85 billion and the prior close stood near $16.59 per share. The sell-off underscores investor sensitivity to operational interruptions at a large lithium asset and to the reputational and regulatory risks that can cascade into funding and contract challenges.

The closure adds to a string of setbacks for Sigma since 2023, when weaker lithium prices and project delays already constrained cash flow and expansion plans. For investors and policymakers, the episode highlights a broader tension: the need to scale lithium supply for electric vehicle and battery markets while tightening environmental and safety oversight of waste management. Regulators have made clear that restoration of access to the piles will require documented remediation, independent verification and inspector signoff.

As Sigma seeks to restart Brazil's largest lithium operation, the company faces a narrow window to address engineering concerns, resolve legal disputes and reassure markets that production can resume safely without creating new community hazards.