Sigma Lithium Secures Development Loan To Build Second Greentech Lithium Plant, Says It's On Track To Boost Production As A Result

Sigma Lithium Corp. SGML, the São Paulo, Brazil-based lithium producer dedicated to powering the next generation of electric vehicles with carbon-neutral, socially and environmentally sustainable Quintuple Zero Green Lithium Concentrate, has secured long-duration financing for the construction of its second plant thanks to a R$487 million (about $90 million) development loan from the National Brazilian Bank for Economic and Social Development or BNDES. 

Proceeds from the loan commitment, signed on August 27, 2024, will bankroll the construction of its second Greentech carbon-neutral production plant for lithium concentrate at Vale do Jequitinhonha in Brazil. The R$487 million loan accounts for nearly 99% of the R$492 million capex budget Sigma Lithium submitted to BNDES for the construction of the second plant.

Company Reports Favorable Terms Bring Opportunities 

Sigma Lithium said the company has benefited from fluctuations in local currency values, as most of the equipment is produced and assembled in Brazil and/or quoted in BRL (R$). The interest rate on the 16-year loan is 7.45%. That's below the Brazilian sovereign interest rate of 10.5%, reports Sigma Lithium. Because of the long duration of the funding, Sigma Lithium has decided to retire much of its unused existing short-term trade finance lines and is paying them back with cash in the bank. 

"The award of this development loan by BNDES crowns over 10 years of relentless execution by our team at Sigma Lithium to build our global leadership in the industrial production of carbon neutral, environmentally sustainable and socially traceable lithium materials," said Ana Cabral, CEO and Co-Chairman of Sigma Lithium. "Having BNDES as a creditor represents the support of the government of Brazil for Sigma Lithium’s industrial expansion plans at Vale do Jequitinhonha'."

The loan comes at a time when the EV market looks set to take off around the world, with sales forecast to grow at a CAGR of 13.8% from now until 2032, hitting $1.89 trillion. That increased demand is driving more need for the raw materials that enable EVs.

Following the news of the loan on Aug. 29, Sigma Lithium's stock jumped by a double-digit percentage. The company will be able to produce more green lithium which should drive sales. For the third quarter, Sigma Lithium expects to produce roughly 60,000 tons of 5.0 Green Lithium, up quarter over quarter and year over year.  "Operationally, the company has invested in improving the throughput and recovery at our Greentech plant, which will bear fruit in the third quarter further increasing the efficiency of the operations," said Cabral in an earnings release. 

Brazil Making Its Mark 

The development loan is part of a broader strategic plan by BNDES to foster in Brazil the development of a competitive and scalable industrial supply chain to globally supply more environmentally and socially sustainable industrialized lithium materials. BNDES stated in its loan commitment letter that the development loan for Sigma Lithium to expand carbon-neutral lithium industrial production capacity is part of BNDES's long-term strategy to support the development of a scalable, green and socially inclusive industrial base in Brazil. 

"In the last decade, we have pioneered and consistently championed the socially inclusive and environmentally sustainable industrialization of battery materials. As a result, our region, once one of the most impoverished in Brazil, now prospers and is known the world over as ‘Lithium Valley,'" said Cabral. "BNDES support allows Sigma to further amplify its socially transformational impact in Lithium Valley: illustrating the effects of how a just and inclusive energy transition has the potential to lift an entire region."

Doubling Production

With the second Greentech plant, Sigma intends to double the production capacity of its green lithium to about 520,000 tonnes from the current 270,000 tons. The second Greentech plant will be home to several innovations designed to increase the efficiency of its industrial process to beneficiate mineral spodumene ore into Quintuple Zero Green Lithium pre-chemical high-purity concentrate, said the company. Construction has already commenced, with completion targeted for summer 2025. 

"We believe that with the optimum long-term capital structure enabled by this development loan by BNDES, Sigma Lithium has a unique opportunity to solidify its global industrial competitive leadership in producing low-cost, environmentally and socially sustainable Quintuple Zero lithium materials to supply the next generation of electric vehicles," said Cabral. 

Featured photo by MiningWatch Portugal on Unsplash.

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