Case Name: IBAMA vs. Siderúrgica São Luiz Ltda., Geraldo Magela Martins e GMM Participações Societárias Ltda. (Coal of irregular origin)

Summary

This is a Public Civil Action (ACP), with a request for urgent relief, filed by IBAMA against Siderúrgica São Luiz Ltda. and Geraldo Magela Martins, the company's managing partner, concerning environmental and climate damage caused by the high use of charcoal without a regular origin. It alleges that the defendant steel mill is part of a fraudulent scheme involving deforestation and illegal charcoal production, and that Geraldo Magela Martins adopted and endorsed contracts for the acquisition of charcoal with ideologically false origins, thus establishing objective and joint liability for the defendant parties. It points out that the use of charcoal without a regular origin constitutes an illegal practice that directly contributes to illegal deforestation. Regarding the actual origin of the illegal charcoal, it states that, although it may originate from any biome, the biome in which the steel mill's irregular activity took place is presumed. Therefore, for the purposes of calculating and directing the reparation, the Cerrado biome is considered. In the context of urgent relief, the plaintiff demands the adoption of an environmental integrity program, the suspension of incentives and tax benefits granted by the Public Authorities, and the freezing of funds to guarantee the reparation of environmental damages. On the merits, among other requests, the plaintiff seeks confirmation of the urgent relief granted and the condemnation of the defendant to pay (i) for interim and residual ecological damage, (ii) for collective moral damage, and (iii) for climate environmental damage, as well as the adoption of an environmental integrity program for at least 5 years.

The defendant steel company filed a defense alleging, preliminarily, that the initial complaint was flawed for failing to demonstrate the event that caused the alleged environmental damage and that the managing partner, Geraldo Magela Martins, lacked standing to be sued. On the merits, it argued, among other issues, that (i) there is no evidence of the defendant steel company's actual participation in the fraud scheme, thus precluding joint and several liability for fraud committed by third parties, (ii) it could not be considered a direct or indirect polluter, as there is no evidence of any connection between the company and illegal logging, (iii) there is no causal link between the alleged environmental damage and the defendant's conduct, and (iv) there is no causal link between the defendant's activity and global warming, especially due to the difficulty in assessing the extent of the damage.

In a preliminary ruling, the court denied the request for urgent relief. It held that, at that stage of the proceedings, the imposition of environmental integrity programs could not be demanded, rejecting this request and the requests related to the suspension of tax incentives or benefits, as well as access to credit lines. The decision acknowledges the causal link between the business activity and the production of charcoal originating from illegal deforestation. However, it pointed to the need for further evidence and judicial proceedings to determine the extent of the damage, making it impossible to order the freezing of the aforementioned amount. Finally, it ordered the inclusion of GMM Participações Societárias Ltda. as a defendant.

In their defense, Geraldo and GMM Participações argued that the request for urgent relief should not be granted due to the absence of its prerequisites. They asserted the lack of standing of GERALDO MAGELA MARTINS, as he allegedly did not act to cause environmental damage, and the lack of standing of GMM PARTICIPAÇÕES, as Siderúrgica São Luiz was active, and there was no initiation of an incident of disregard of legal personality to include GMM PARTICIPAÇÕES as a defendant in the action. On the merits, they argued the lack of evidence of environmental damage and causal link, the generic nature of the request for compensation for residual damage, the lack of internal regulations for the use of the CSC (Shared Services Center), and thus requested the dismissal of the action and the rejection of the request for reversal of the burden of proof.

In its reply, IBAMA ratified the grounds presented in its initial filing, arguing for the action to be upheld with its early judgment due to the lack of need for evidentiary proceedings. The court ordered the parties to present their evidence. Siderúrgica São Luiz Ltda. requested the production of testimonial, documentary, and expert evidence, while IBAMA stated that it had no evidence to produce. The court granted the request for testimonial evidence, limited documentary evidence to new documents, and ordered the analysis of the request for expert evidence after the witnesses had been heard.

In May 2025, a judgment was issued that partially granted the requests. The court did not accept the obligation of in-kind reparation for the environmental damage caused, because IBAMA (Brazilian Institute of Environment and Renewable Natural Resources) did not identify the location of the deforestation or its direct perpetrator, leaving the damage unproven and making in-kind reparation unfeasible. However, collective moral damages were recognized due to the acquisition of a large volume of illegally sourced charcoal, which causes an environmental impact affecting the interests of the entire community, and the amount of one million reais was set for its reparation.

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Main norms mobilized

• Article 170 of the Federal Constitution (CRFB/88)
• Article 225 of the Federal Constitution (CRFB/88)
• National Environment Policy Act - PNMA (Federal Law 6.938/1981)
• National Policy on Climate Change Act - PNMC (Federal Law 12.187/2009)
• United Nations Framework Convention on Climate Change - UNFCC (Federal Decree 2.652/1998)

Case timeline

Case documents