Sigma Lithium tumbles: the former lithium darling faces its toughest crisis yet in Brazil

Sigma Lithium shares tumble 29% amid investor doubts over production and expansion in Brazil. Analysts warn of rising costs and delays as the lithium market weakens.

Sigma Lithium Corp., once hailed as one of the brightest stars in the lithium industry, is now facing a sharp investor backlash. The company’s shares have plunged nearly 29% in just two days, marking the worst two-day slump in 21 months, as mounting doubts cloud its near-term production outlook and key expansion plans in Brazil.

On Monday evening, BMO Capital Markets joined a growing list of analysts cutting expectations for the miner after Sigma abruptly changed its mining contractor last month, a move the company said was aimed at improving efficiency at its flagship operation in Minas Gerais, Brazil.

Investors on edge amid cost and delay risks

Analysts warn that Sigma’s plans to introduce larger haul trucks and upgrade existing equipment could drive up capital expenditures and delay the timeline for its planned expansion.

“We’re not sure of the exact reason for the recent volatility in the stock, but there are many questions around the contractor change, the balance sheet, etc., causing SGML to underperform this lithium rally,” said Joel Jackson, analyst at BMO, in a note to clients.

Meanwhile, Bank of America has been sounding the alarm since August about the company’s delays in vendor payments, downgrading Sigma’s stock from “buy” to “neutral” late last month.

Falling lithium prices and shifting global dynamics

The selloff comes as the global lithium market remains under pressure, hit by slower-than-expected electric vehicle demand growth and policy uncertainty stemming from U.S. President Donald Trump’s overhaul of clean-energy incentives in the world’s largest economy.

Sigma, which did not immediately respond to requests for comment, has now lost more than 50% of its value this year, following a 64% drop in 2024. The company is scheduled to release its third-quarter results on November 14, a key moment that could determine whether it can restore investor confidence.