Shares of Sigma Lithium (NASDAQ:SGML) dropped 13% on Friday, extending losses from the previous day after Brazilian labor regulators ordered the closure of three waste piles at the company’s main mining operation over safety concerns.
Brazil’s Labor Ministry suspended access to the waste piles at Sigma’s Grota do Cirilo mine in the state of Minas Gerais on December 5, citing what it described as a “grave and imminent” risk to workers and nearby residents. Authorities rejected the company’s appeal to overturn the decision earlier this week.
The development prompted Canaccord to downgrade Sigma Lithium from buy to hold, adding further pressure to the stock. The move followed a downgrade last week by Bank of America, which pointed to uncertainty over the timing of a restart at the mine, where production has been halted since October.
Sigma Lithium pushed back against the allegations in a statement, saying there are no safety issues and that the piles contain only soil with no contaminants. The company also said the restrictions do not interfere with operations or its planned timeline for resuming production. In contrast, labor inspectors cited a “partial rupture” in one of the piles located near a school in the town of Poco Dantas, raising concerns about the site’s structural integrity.
In order to regain approval to use the restricted waste piles, Sigma would be required to submit documentation demonstrating that the issues identified by inspectors have been resolved. The company has maintained that the piles comply fully with safety standards set by regulators.