By Brazil Stock Guide — Sigma Lithium said its flagship Grota do Cirilo lithium complex in Brazil remains in operation despite a federal court injunction ordering the suspension of its environmental licenses and mining activities, setting up a legal confrontation over the company’s only producing asset.
The Nasdaq-listed miner said late Monday that both its mining and industrial activities were continuing and that it had not received formal legal communication regarding the preliminary ruling. It said it plans to begin its legal defense on Tuesday, when Brazilian courts resume regular operations after a three-day holiday.
A federal judge in Minas Gerais ordered the suspension of environmental licenses and mining activities at Grota do Cirilo after a lawsuit brought by the Federation of Quilombola Communities of Minas Gerais. The case centers on whether the project lies within the area of influence of the Baú Quilombola community and whether the licensing process should therefore have included prior consultation with the community.
The ruling also called for an independent georeferencing assessment to determine the distance between the mining project and the quilombola territory and barred Minas Gerais authorities from granting new licenses while the issue is being examined. The court imposed a R$100,000 fine for non-compliance with the suspension order.
Sigma described the injunction as having been issued “without due process” and said it was “in dissonance with Brazil’s strong rule of law.”
Brazilian procedural law, however, allows judges to grant emergency provisional relief before hearing the affected party. Under the country’s Civil Procedure Code, provisional orders generally remain effective while proceedings are pending unless they are modified or overturned by a court.
That makes the immediate enforceability of the ruling a key point in the dispute.
Sigma said in its statement that elements of the injunction would not be expected to be enforced until the completion of the full legal process, which it said could take several years. The company also argued that any daily fine would only ultimately become payable following a final adverse judgment.
The company did not say that it had obtained a separate court order suspending or overturning the injunction.
The TAC remains, but so does the court order
Sigma also pushed back against reports suggesting that the federal ruling invalidated a recent Termo de Ajustamento de Conduta, or TAC, signed with Minas Gerais state authorities. The distinction is important. The federal judge did not prevent the state and Sigma from proceeding with the agreement. But the court said the TAC does not override the federal injunction suspending mining activities, according to reports on the ruling.
The agreement had allowed Sigma to resume activities after an earlier state-level suspension and underpins the company’s current production and expansion plans. Sigma reiterated Monday that it expects to produce 240,000 tonnes of lithium oxide concentrate over the next 12 months and 330,000 tonnes in fiscal 2027.
Grota do Cirilo, located in Araçuaí and Itinga in Minas Gerais’ Vale do Jequitinhonha, is Sigma’s sole producing operation and has nameplate capacity of 330,000 tonnes a year. The company is pursuing expansions that it says could eventually increase annual capacity to 830,000 tonnes.
Court location argument
Sigma also highlighted that the ruling was issued in Teófilo Otoni, which it said is more than 300 kilometers from its operations. The distance does not, by itself, indicate that the court lacks territorial jurisdiction. Brazil’s Federal Regional Court for the 6th Region lists both Araçuaí and Itinga among the municipalities under the federal judicial jurisdiction of Teófilo Otoni. Araçuaí also has an advanced federal court unit linked to the Teófilo Otoni subsection.
An election claim that does not match Brazil’s calendar
In an unusual section of the statement, Sigma linked the dispute to Brazil’s presidential election and warned that what it called inaccurate reporting about the company could increase as voting approaches. The release said Brazil was entering the final weeks before a second-round election on “November 15.”
That date is incorrect. Brazil’s first round of the 2026 general election is scheduled for October 4, with a possible second round on October 25, according to the official calendar published by the Superior Electoral Court. Sigma argued that Minas Gerais is a key electoral battleground and described Vale do Jequitinhonha as a swing region.
The legal dispute comes as Brazil seeks a larger role in the global supply chain for critical minerals. Sigma has positioned Grota do Cirilo as one of the largest lithium concentrate operations in the Americas and says its processing plant uses renewable electricity, recycles its water and operates without a tailings dam. For investors, however, the immediate issue is more straightforward: a federal court has ordered mining to stop, while Sigma says it remains in operation and intends to challenge the ruling.
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