Short seller attacks Standard Lithium

A short seller is claiming that the leaders of Standard Lithium are overhyping the company’s direct-lithium-extraction technology, which aims to remove lithium from briny aquifers and turn it into the raw material for batteries.

Hindenburg Research, an investment firm that will profit if Standard Lithium’s stock price falls, claims that Standard Lithium has spent more money on marketing than R&D since becoming a public company in 2016. The report argues that an initial rejection of the company’s patents shows they’re weak and may not be granted. Hindenburg also claims that Standard Lithium’s executives have a history of exaggerating successes at previous companies.

Standard Lithium calls the report false and misleading in a press release. The company says it has spent more than $27 million on demonstration plants—15 times as high as Hindenburg’s R&D figure—and that the initial rejections are typical of the patent application process.

The Hindenburg report also criticizes Koch Strategic Platforms’ $100 million investment in Standard Lithium last year, which gave the company’s technology an aura of credibility. Hindenburg argues that in Koch’s haste to invest in new technologies it failed to conduct proper due diligence. Koch disagrees. A spokesperson says its research found that Standard Lithium was a “promising bright spot on the path towards lithium production” in the US.

Hindenburg is the second short seller to attack Standard Lithium in less than 3 months. In November, Blue Orca Capital claimed that the company’s technology wasn’t recovering as much lithium as it had initially promised. Standard Lithium refuted those claims, saying the regulatory data Blue Orca used to make its claim don’t tell the whole story.

As electric vehicles become more popular, US carmakers are eager to find North American sources of lithium to make their battery supply chains more secure. Standard Lithium, which has projects in Arkansas and California, argues that direct lithium extraction is one way to do that. However, the technology is more expensive than typical lithium-extraction processes, and it hasn’t been proven at large scale.