A Canadian miner’s supposed ‘green lithium’ shipments used carbon credits stemming from Amazonian offsetting project now suspended amid a federal investigation
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Sigma Lithium’s Jequitinhonha Valley processing plant in the state of Minas Gerais, south-eastern Brazil. The Canadian company claims to produce “carbon neutral” lithium, but the projects used to offset the related greenhouse gas emissions are under federal investigation for suspected environmental crimes (Image: Gil Leonardi / Imprensa MG)
Sigma Lithium often says that its mining model in Brazil is raising the quality of the global lithium business.
The Canadian company “is at the forefront of environmental and social sustainability in the electric vehicle battery materials supply chain”, according to its press releases. Sigma first named its flagship product, which it extracts in the north of Minas Gerais state, “triple zero green lithium”. More recently, it used the name “quintuple zero green lithium”.
These multiple “zeroes” refer to the technologies with which Sigma says it is setting “a new standard for environmentally sustainable mining”. According to the company, it: uses “zero drinking water”, since all water is treated and recirculated wastewater; has “zero tailings dams”, since it eliminates its waste by selling or recycling it for road paving; uses “zero carbon-intensive electricity”, because all the electricity it uses comes from renewable sources; and generates “zero toxic chemicals”, thanks to a method called “dense media separation”. This positioning is central to its marketing, but it is also part of a business strategy that has allowed it to reap higher prices in the market.
There is a fifth fundamental “zero” in Sigma’s marketing: its mining operations, it says, are “zero carbon” or “net zero carbon emissions”. This means the amount of greenhouse gases it releases into the atmosphere is equal to the amount it has eliminated. It has achieved this, in its own words, by having “effectively lowered its carbon footprint with a series of pioneering initiatives”, such as carbon offsets.
On 26 July 2023, Sigma Lithium announced its first shipment of 30,000 tonnes of lithium and by-products (sent to China in the presence of Brazil’s vice-president Geraldo Alckmin and Minas Gerais’s governor Romeu Zema). Sigma explained it had achieved carbon neutrality for its shipment by “offsetting the remaining ‘hard to abate’ carbon emitted during its production process”, both at its mine and at its processing plant. It did so by purchasing 59,000 carbon credits from a voluntary carbon market project in the Brazilian Amazon.
This project reportedly reduced the carbon footprint of its mining operation to zero in its first year of production. However, it has been under investigation by the Brazilian justice system for over a year, over suspicions of illegal deforestation, misappropriation of public lands, corruption, and other possible crimes, as shown by a journalistic investigation and the June 2024 Federal Police’s “Operation Greenwashing”. This allegation led the international certifier that endorsed it at the time to suspend it. As of today, the project remains on hold.
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Lithium-rich rocks at a mine in Divisa Alegre, Minas Gerais. Brazil is home to an estimated 1.3 million tonnes of lithium resources, mostly found in volcanic rocks (Image: Ana Torres / Imprensa MG)
When consulted by journalists for this report, Sigma Lithium stated that it has not used carbon credits since 2024, when it changed its strategy from using environmental offsets to reducing emissions from its own production: “The company reaffirms its commitment to mining with a very low environmental impact, based on technological innovation, health, safety and socio-environmental responsibility, in line with global decarbonisation objectives.”
These are the findings of an investigation carried out by Repórter Brasil and the Latin American Centre for Investigative Journalism (CLIP), as part of the Lithium in Conflict project. This initiative brought together 10 media outlets from across Latin America, including Dialogue Earth, to understand some of the conflicts surrounding the lithium industry in the region. This investigation was also supported by the Pulitzer Center’s Rainforest Investigations Network.
Green lithium in Brazil
Most attention in the lithium market has tended to focus on Argentina, Bolivia and Chile, the so-called “lithium triangle” that contains the world’s largest reserves.
Brazil, which is home to an estimated 1.3 million tonnes of lithium resources, according to the United States Geological Survey’s annual minerals report, is also trying to break into this market. It ranks tenth globally in terms of economically or technically feasible lithium deposits. Unlike its neighbours to the west, whose lithium is found in brine pools, Brazil’s lithium is usually found in volcanic rocks.
One such company is Sigma Lithium, a Canadian mining company that has been operating for a decade in the Jequitinhonha Valley, in north-eastern Minas Gerais. Here, in the municipalities of Itinga and Araçuaí, 600 kilometres north of state capital Belo Horizonte, lie its main assets: the Grota de Cirilo mine and the Greentech processing plant.
In October 2024, the Brazilian state development bank, BNDES, approved financing of BRL 486.8 million (about USD 89.4 million at the time) for the implementation of a new processing unit that Sigma calls its “second Greentech carbon-neutral factory”.
Sigma’s public positioning revolves around the technological achievements that currently allow it to sell its lithium as “green” and “quintuple zero”. It is a narrative that the company has presented at several UN climate change summits, including Glasgow in 2021, Sharm al Sheikh in 2022 and Dubai in 2023.
‘Premium product with premium pricing’
Sigma’s 26 July 2023 announcement regarding its inaugural shipment detailed 15,000 tonnes of “environmentally sustainable and carbon neutral battery-grade lithium”, and another 15,000 tonnes of by-products. It set sail from the Atlantic port of Vitória.
“We were founded with the mission to produce environmentally sustainable lithium with the lowest possible greenhouse gas emissions,” Sigma’s CEO Ana Cabral said at the time.
This environmentally sustainable character allowed Sigma to sell its lithium at a higher market price of USD 3,500 per tonne of lithium and USD 350 per tonne of by-products. A “premium product with premium pricing”, in the words of the company itself.
Its customer was Yahua International Investment and Development Co Ltd, a Hong Kong-based company that is part of the Chinese Yahua Group. It supplies lithium hydroxide to electric vehicle manufacturers such as Tesla in the United States and BYD in China.
To fulfil its promise of achieving carbon neutrality throughout its lithium production chain, Sigma turned to the voluntary carbon market. It purchased 59,000 carbon credits to offset the same number of tonnes of CO2 emitted.
On paper, the deal is a win-win. Projects under REDD+, the mining company’s carbon market initiative of choice, typically link local communities or private landowners who prevent deforestation in strategic ecosystems with companies seeking to offset their carbon footprint. In this case, Sigma pays the former for use of their environmental results.
To this end, Sigma signed an agreement with Carbonext, one of the largest companies in the Brazilian carbon market. Both companies publicly celebrated the partnership. The mining company emphasised “the carbon credits generated by Carbonext and its partners are of high quality and integrity.” Janaína Dallan, president of Carbonext, stressed that “projects like the ones supported by Sigma protect more than two million hectares in the Amazon biome with constant local and satellite monitoring to ensure the high integrity and quality of forest conservation projects.” As Sigma announced, thanks to this scheme, it “successfully achieved net zero carbon emissions” in its pioneering shipment.
Sigma is not the only mining company publicly emphasising its environmental performance.
“Today it is becoming economically beneficial to engage in a sustainability discourse. Many companies are doing it not only to reassure civil society or regulators, but also because a sort of secondary market for ‘green lithium’ has emerged,” Thea Riofrancos, a US-based researcher and author of the recently published Extraction: The Frontiers of Green Capitalism, told our reporters.
A carbon project that hid deforestation
The carbon project that Sigma Lithium ultimately chose in mid-2023 to offset its emissions, called the Unitor REDD+ Project, had a serious problem that would come to light almost a year later.
On 28 August 2023, Sigma Mineração SA – one of Sigma’s two Brazilian subsidiaries – used 59,000 credits. That is according to the transaction record of the US certifier Verra, which endorsed the initiative. It did so, according to the register itself (which breaks down six transactions), with the aim of “environmental compensation for greenhouse gas (GHG) emissions related to Sigma Lithium’s annual production in Brazil”.
The chosen project revolves around 15 neighbouring farm properties in Lábrea, in the south-west of Amazonas state. According to the project design document, this municipality had the fourth highest rate of deforestation in Brazil between 2008 and 2020. By joining the project, these private properties, totalling 99,035 hectares, sought to prevent deforestation and the sale of illegal timber.
The project listed proponents: the carbon market developer Carbonext Consultoria Ltd; and the agricultural company Ituxi Administração e Participação Ltd, owner of one of the properties included in the environmental scheme. The public face of the entire environmental initiative was the businessman Ricardo Stoppe Jr, a doctor from São Paulo described by an economic news portal as Brazil’s largest individual seller of carbon credits.
A deforested area in Lábrea, in the south-west of Brazil’s Amazonas state. Carbon offset projects used by Sigma Lithium in 2023 were situated in this area (Image: Alberto César Araújo / Amazônia Real, CC BY NC ND)
Validated by the Spanish auditor Aenor and certified by Verra in May 2022, the Unitor project sold its first credits that same year.
However, not everything was as it seemed. In May 2024, Unitor and another project called Fortaleza Ituxi (both linked to Ricardo Stoppe Jr) were found to have inconsistencies between the volume of timber declared to authorities, and the amount actually felled according to satellite images. The images were analysed by the Center for Climate Crime Analysis (CCCA) for a journalistic investigation by Mongabay, as part of the collaborative project Opaque Carbon, led by CLIP.
The discrepancy found in the images suggested irregularities in timber management. Grupo Ituxi, the company responsible for both projects, denied to Mongabay any connection with the suspicions and stated that all its initiatives are audited and certified.
Two weeks after the investigation was published, the Federal Police launched Operation Greenwashing against those responsible for the carbon projects, investigating possible links to land grabbing and illegal deforestation. This year, the Federal Police ended their investigation and formally concluded that Stoppe Jr and 30 other individuals misappropriated public lands for the generation of carbon credits, among other crimes, as revealed by the Folha de Sao Paulo newspaper in October. The Federal Police believe a criminal organisation was behind the scheme.
Stoppe Jr was arrested in June 2024 but is currently on provisional release under electronic surveillance. The final report of the Federal Police investigation is being analysed by the Federal Public Prosecutor’s Office (MPF), which will decide whether to bring the case to court.
A week later on 13 June 2024, Verra suspended them “until all findings are satisfactorily closed”. Carbonext told reporters for this investigation that it had written to Verra five days before to inform it of the police operation and its decision to “suspend any sale, transfer, generation and issuance of credits from these projects until further notice from the authorities”. As of October 2025, Unitor is described on Verra’s platform as “on hold”.
Sigma Lithium told our reporters it is now focused on its “quintuple zero” strategy, describing it as a “pioneering model in the sustainable mining sector”.
In addition to Sigma, companies that purchased credits from Unitor include the auditing firm PwC International, Colombia’s state oil company Ecopetrol, the Austrian state oil company OMV, the Belgian chocolate company Guylian and Belo Horizonte airport’s concessionaire.
A potential issue of environmental integrity
Sigma Lithium is not responsible for the actions of the promoters of the Unitor project and – as far as this journalistic collective has been able to ascertain – it is not implicated in the police investigation. Nonetheless, its name and status as a purchaser of credits from the project appear in at least one document from the Brazilian authorities.
“There is information about large companies and global brands using these irregular credits to appear sustainable to their consumer audience,” says a legal recommendation from the Federal Public Ministry of Amazonas. It calls for the suspension of REDD+ projects in the state.
By mid-2024 at the latest, it should have been clear to Sigma that the Unitor credits it used to offset its emissions were problematic. It was a problem because the mining company’s carbon neutrality goal is strongly tied to offsets. As explained in a 2025 shareholder report, Sigma’s “ambitious” net zero targets are “measured as emissions minus carbon credits”.
Another similar 2023 report detailed its net zero strategy. Sigma would take responsibility for all its emissions, across scope 1 (direct emissions), scope 2 (energy consumption emissions) and scope 3 (value chain emissions). For the latter, it proposed achieving this in two phases: the first in 2023, to include the emissions from the transport of its goods across the 700 kilometres from Minas Gerais to the port in Vitória; and another from 2024 onwards, which would include its maritime transport emissions. For transport, it planned to use biofuels, while for residual emissions – or those that could not be reduced by other methods – it would resort to carbon credits.
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In July 2023, approximately 30,000 tonnes of Brazilian lithium were shipped from Vitória port in Espírito Santo state to China. The mineral is critical to the manufacture of electric batteries, solar panels and other energy transition technologies (Image: Cristiano Machado / Imprensa MG)
Given that the carbon market is relatively new, there is no explicit methodology on how companies should proceed when they realise the credits they purchased and used turn out to have serious environmental or social problems. However, experts consulted by Repórter Brasil and CLIP agreed these companies have a responsibility to be transparent towards their customers, investors and the public.
“If it is a serious company, upon learning of the case, it should inform investors and customers, notify them that it will discard the 59,000 credits because it is unsure of their integrity, and purchase others to guarantee zero-carbon production, this time paying more attention to their quality,” said Shigueo Watanabe Jr, a researcher at the environmental organisation ClimaInfo.
Another researcher working in the sector interviewed for this report, who spoke on condition of anonymity, agreed that companies should act publicly and transparently. “A company that is an interested party in a project involved in a scandal over possible environmental crimes should make some kind of public announcement, in addition to stating its position and what it is doing to remedy the situation. It’s a matter of reputation,” they said.
Carbonext told our reporters that, as soon as it became aware of the investigations, it legally terminated the service contracts for the development of the three carbon projects and notified Verra.
Because “the ownership and legality of these credits could be affected,” the carbon project developer explained that it decided to suspend “any sale, transfer, generation and issuance of credits from these projects until further notice from the authorities”.
Carbonext did not respond when asked whether it notified the companies that used its credits of Unitor’s suspension, nor whether it recommends any procedure for buyers to replace them. In its view, “there has been no environmental integrity issue” because “the work proposed by the project has been implemented, audited and its results verified.”
Verra told this investigation that it does not inform credit users of a project’s suspension since it “does not engage in market transactions, meaning we don’t have a direct relationship with the ‘end user’ you speak of.”
At least one of Sigma’s major shareholders has a stated interest in ensuring its investments are increasingly low in greenhouse gas emissions. Norges Bank Investment Management, which manages the Norwegian Government Pension Fund (the world’s largest sovereign wealth fund), seeks to ensure all companies in its portfolio commit to achieving carbon neutrality by 2050 or earlier. They must “align their activities with global net zero emissions in line with the Paris Agreement”, and set “science based” interim and long-term emission reduction targets.
Norges Bank Investment Management declined to comment when asked if it was aware of the problems of possible environmental integrity issues with the carbon credits used by Sigma.
Sigma’s approximately one hundred shareholders are mainly global asset managers and banks from around the world. The largest investor, with 43% in shares, is the Brazilian company A10 Investimentos Ltda. This investment management firm is legally represented by Sigma’s co-chair, Ana Cabral, and controlled (according to the mining company’s most recent annual financial report) by Sigma’s other co-chair, Marcelo Freire da Paiva.
The destination of ‘quintuple zero’ lithium
The buyer of the first Sigma lithium shipment declared “carbon neutral” using Unitor carbon credits was Yahua International Investment and Development Co Ltd. This Hong Kong-based outfit is a subsidiary of the Chinese company Sichuan Yahua Industrial Group Co, better known as Yahua Group.
Established in 1952, Yahua Group is one of the oldest chemical companies in China. Its businesses are currently divided between non-military explosives and the lithium production chain, including mine exploration, processing and product sales.
The company says it plays a “vital role in the global clean energy value chain”. It has a significant customer base, with direct buyers including the electric vehicle and battery companies Tesla, BYD and CATL.
Like its supplier Sigma, Yahua attaches great importance to reducing its emissions. It has signed several commitments regarding the reduction of its products’ carbon footprints, which it describes in its latest sustainability report as “green and low-carbon”.
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A lithium chemical plant in Divisa Alegre, which is on the border between Minas Gerais and Bahia states. In recent years, lithium-related activity has disrupted the health and peace of local communities (Image: Ana Torres / Imprensa MG)
Reporters for this investigation asked Yahua whether Sigma Lithium informed it that its cargo sold in 2023 was offset with carbon credits from a now-suspended project under federal investigation. At the time of publication, Yahua had not responded.
The battery manufacturer CATL confirmed Yahua Group is part of its supply chain but noted that “according to our traceability system and supply chain mapping, we can verify that the materials supplied to CATL by Yahua do not come from Sigma Lithium.” The company added that it applies “rigorous due diligence protocols” to its suppliers.
BYD did not respond to reporters’ questions about what measures it took to verify the origin of the lithium purchased from Yahua Group, or to check for any social and environmental irregularities. Tesla was also contacted, but did not reply.
Alerts about possible land impacts
The questioning of “zero-carbon lithium” is not the only issue surrounding Sigma. Traditional peoples’ associations, civil society organisations and public bodies have denounced the potential negative impacts of the lithium industry in the region.
“More than 100 families affected by the project suffer daily negative impacts, collective and individual damage, such as high noise levels, dust, cracks in their homes, health problems and losses in food production,” says a letter signed on 21 August by 68 entities. Those include quilombola (communities formed by descendants of enslaved African people) and Indigenous organisations, workers’ unions and local politicians.
The letter was in response to a tribute paid by the Minas Gerais legislative assembly to Sigma Lithium’s CEO and co-founder, Ana Cabral. Two days later, she received the title of honorary citizen of the state for her “relevant services rendered to Minas Gerais”.
We breathe dust 24 hours a day
- Piauí Poço Dantas resident
In a ruling published in December 2024, Brazil’s Federal Public Ministry warned lithium mining has a high environmental impact, “with the potential to aggravate the vulnerability of traditional communities”. The document identified 258 traditional communities affected by various companies. In the case of Sigma, the document highlights that there is a “clear deficiency” in the granting of environmental licences.
In early September, the MPF sent a recommendation to the National Mining Agency requesting the suspension and review of lithium exploration and extraction authorisations in Araçuaí, where Sigma operates.
In addition to water access issues, another problem highlighted by the MPF is the emission of dust and the presence of toxic waste “associated with respiratory problems and skin diseases in nearby populations”. One such community is Piauí Poço Dantas, a village of family farmers near the Grota do Cirilo mining complex. “We breathe dust 24 hours a day” said one resident, who spoke with our reporters on the condition of anonymity.
Residents of Piauí Poço Dantas also reported increased noise in the community, and cracks in houses caused by the tremors generated by detonations. These perceptions are mentioned in a technical report by the Minas Gerais state prosecutor’s office (MPMG), which heard from four communities that surround the project.
Reporters for this investigation asked Sigma about these documents. The company did not respond but has previously denied any irregularities in the prior consultation, in its relationship with neighbouring communities, or in its environmental record.
Meanwhile, Sigma has continued to sell its “quintuple zero lithium” (which includes the assurance of carbon neutrality) to other global companies.
In September 2024, Sigma reported a shipment of 22,000 tonnes of lithium to the Japanese automotive giant Mitsubishi. Between that same month and April 2025, it reported four shipments totalling 76,000 tonnes to IRH Global Trading Ltd, a critical metals and minerals trading company in the United Arab Emirates, owned by the Royal Group of Abu Dhabi.
In all of these transactions, the mining company emphasised “zero emissions”, although it did not publicly report whether it used carbon credits – or which projects it employed to achieve this. Verra’s public transaction register does not list any further transactions in which Sigma appears as a beneficiary, although the voluntary carbon market allows users to opt out of publicly disclosing their name.
Sigma says it has not used carbon credits since 2024. The company also does not detail any alternative decarbonisation or environmental efficiency measures it has incorporated instead.
Sigma changed its environmental compensation strategy after the credits it used to reduce emissions in its first year of production became implicated in a federal investigation for possible environmental crimes. Despite this, the mining company has yet to speak publicly about the issue.
Authors: Isabel Harari, Andrés Bermúdez Liévano, Kuek Ser Kuang Keng, Jelter Meers
This article was originally published on Dialogue Earth under the Creative Commons BY NC ND licence. Read the original article.
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