How companies in the mining industry can become more sustainable and environmentally friendly: the case of Sigma Lithium Corporation
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2023-02-10
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Schiozer, Rafael Felipe
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The mining industry has been historically regarded as unsustainable and incidents causing hundreds of victims lay in the history of many countries worldwide. Nevertheless, implementing sustainable mining is more important than ever, when its role in providing metals to achieve the energetic transition is taken into consideration. Especially, the lithium industry will play a key role in determining whether major economies will manage to reach the net zero carbon targets, since lithium is the main component in all the commercialised battery technologies. This paper assesses the status of sustainability in the lithium industry through a literature review focused on the sustainable practices and on whether they reach the desired objective. Subsequently an in-depth analysis of the lithium market will be developed in conjunction with a unique case study around a junior mining company who made its performance in ESG the core of its business strategy, namely Sigma Lithium Corporation. The paper will show that Sigma took advantage of the impressive demand for lithium to enter the market with a strategic positioning thanks to its strong investments in ESG-friendly practices. More specifically, the relationship between the implementation of its ESG practices and the outperforming rate associated to the company’s valuation was investigated through the analysis of 18 equity reports between 2020 and 2022. The results show that the company was facilitated in its ramp-up stage and enjoyed a premium valuation on capital markets thanks to its ESG-based approach.