RIO DE JANEIRO - Brazil's Labor Ministry has shut down three waste piles at Sigma Lithium's flagship mine in the state of Minas Gerais, citing a "grave and imminent" risk to workers and the local community, according to documents seen by Reuters.

The order adds to Sigma's ongoing struggle to restart the mine, previously Brazil's largest lithium producer, with annual capacity of 270 000 metric tons of lithium concentrate, which has been inactive since October, the documents show.

The miner and the ministry did not immediately reply to requests for comment.

In November, the firm said during an earnings call that the mine would resume production in two to three weeks.

SHARES PLUNGED AFTER DOWNGRADE
Last week, with the mine still non-operational, Bank of America downgraded the firm's shares, citing a lack of clarity on when production would resume. Their assessment sent shares tumbling 15% in a single day.

On Tuesday, the Toronto-listed firm said it was advancing its plan to resume production.

Labor officials issued the decision to close access to the piles on December 5, and on Tuesday, they dismissed the company's appeal to lift the order.

It is unclear if Sigma could produce lithium at the Grota do Cirilo mine, its only productive asset, without using the three prohibited piles, where the miner stacks waste after processing.

Sigma told inspectors that losing access to the piles would cause "significant operational and economic impacts, in addition to jeopardizing the continuity of mining activity," documents show.

Once the biggest player in Brazil's fledgling lithium industry, Sigma has faced headwinds since 2023 as it struggled with lower lithium prices and challenges expanding its mining operation.

The firm has also tangled with former co-CEO Calvyn Gardner, ex-husband of the current CEO Ana Cabral. Gardner is suing the company over mining rights and has voiced concerns about safety at Grota do Cirilo.

To resume using the prohibited waste piles, Sigma would have to present documents proving it has fixed issues identified by the inspectors, according to a document.

A labor inspector who visited the site of the mine reported on November 12 a "partial rupture" of one of the piles near a school in the small town of Poco Dantas, which he cited as evidence of structural issues.

"The company was given ample opportunity to minimize its risks," said a labor inspector in a January 6 report dismissing Sigma's argument that the piles are safe.