Sigma Lithium has obtained a non-binding letter of intent (LOI) from the Development Bank of Brazil (BNDES) on additional funding for the Quintuple Zero Green Lithium Grota do Cirilo project.

This credit line from BNDES is aimed at expanding the project in Vale do Jequitinhonha, Brazil.

The company plans to invest 492.4m reais in the facility.

The LOI signifies the initial step towards securing funding, although the finalisation of the Development Bank Credit Line is contingent upon Sigma Lithium adhering to BNDES’ operational policies.

The review process includes the evaluation of the proposed financing structure and the provision of satisfactory collateral by Sigma Lithium to BNDES.

The consummation of the credit line is subject to several conditions including final credit approval by the BNDES Credit Committee, the negotiation of definitive documentation and other standard closing conditions.

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Notably, the closure of the deal is not dependent on lithium market conditions or pricing factors, which are beyond the company’s control.

BNDES’ commitment to this credit line is part of a larger strategic initiative to promote the development of a competitive industrial supply chain in Brazil.

The bank has emphasised that financing projects that enhance the industrial production capacity of critical minerals are a key component of its long-term strategy to foster a green and inclusive industrial base in the country.

Sigma Lithium co-chairman and CEO Ana Cabral-Gardner said: “We are honoured and delighted with the letter of intention received today from BNDES. Development bank debt awarded by Brazil has the potential to significantly improve our capital structure due to typical longer duration, significantly lower interest rates and grace periods.

“Having BNDES as a creditor represents the support of the Government of Brazil to Sigma Lithium’s industrial expansion plans at Vale do Jequitinhonha.

“This BNDES support also allows Sigma to further amplify its transformational impact in the Vale do Jequitinhonha, one of the poorest regions in the country, illustrating the effects of how a just and inclusive energy transition has the potential to lift an entire region.”

Last year, in September, Sigma Lithium signed an agreement to supply lithium to Glencore.