Focus: Standard Lithium retools operations after short seller's attacks

Tetra Technologies

07/09/2022 11:00

By Ernest Scheyder
    Sept 7 (Reuters) - Standard Lithium Ltd  SLI.V  is trying to
become the first new U.S. source of lithium for electric vehicle
batteries in decades, a bullish target fueled in part by
technical and engineering changes the company is making in
response to accusations that its technology does not work. 
    Vancouver, British Columbia-based Standard is among a wave
of companies, including mining major Rio Tinto Ltd  RIO.AX ,
trying to use direct lithium extraction (DLE) technologies https://www.reuters.com/business/sustainable-business/new-lithium-technology-can-help-world-go-green-if-it-works-2022-04-07
 to supply the battery metal to the EV industry.
    But no DLE technology has worked at commercial scale, and a
prominent short seller https://www.reuters.com/business/energy/short-seller-alleges-standard-lithium-technology-does-not-work-2022-02-03
 alleged in February that Standard's plan to produce lithium in
Arkansas was based on faulty processes. The allegation from
Hindenburg Research set in motion a selling spree that wiped out
more than $300 million from Standard Lithium's market value. The
stock has yet to recover.  urn:newsml:reuters.com:*:nL1N2UE1JR 
    Standard pushed back against Hindenburg's claims and
defended its lithium extraction technology, but it also made
some changes. 
    In July, it hired two senior engineers to oversee project
development. It is now updating its equipment with the help of
top shareholder Koch Industries Inc and plans to bring in
external engineering firms to design a lithium plant and finish
a key report for investors. 
    "We've shifted gears," Chief Executive Robert Mintak told
Reuters. "We've been lean on purpose, but we now need to bring
in the bandwidth with experience to build projects."
    Standard said in July it would hire that engineering firm
"no later than August," but as of early September it had still
not announced one.   
    Four analysts recommend buying Standard's stock and believe
it should be trading at nearly twice current levels, according
to Refinitiv Eikon data. This suggests Wall Street expects the
company's prospects to brighten in the wake of U.S. legislation
https://www.reuters.com/markets/commodities/miners-face-supply-chain-overhaul-meet-us-ev-credit-deadline-2022-08-11
 that links EV tax credits to domestic lithium production.
    Lithium prices have skyrocketed this year due to surging
demand from the auto sector. China remains the world's largest
lithium processor, though proposed rival projects in the United
States and European Union have faced a range of setbacks.
(Graphic: https://tmsnrt.rs/3ckscNn)
    
    
    
    Standard plans to filter lithium from the brine wastewater
of a Lanxess https://www.reuters.com/article/standard-lithium-lanxess-jointventure-idUKL2N1XK1XD
 AG  LXSG.DE  bromine facility in Arkansas. That wastewater is
currently reinjected into the Smackover Formation, a geologic
formation which stretches from Florida to Texas. Standard hopes
its plan could produce the battery metal with far fewer
environmental impacts than traditional mining, if its technology
can work at commercial scale.
    Lanxess, which has an option to buy Standard lithium at a
discount, launched an EV battery parts business last year. It
said it expects the Arkansas project to produce lithium "in an
environmentally friendly way," but declined to comment on
Standard's technology.
    Since the Hindenburg report, Standard has added brine
filtration equipment from Koch to its Arkansas pilot plant and
enlarged several tanks and other equipment. 
    Koch in July bought a separate DLE technology from Chemionex
Inc, which is run by one of Standard's scientific advisers. Koch
is using the technology to build its own DLE business. In
California's Salton Sea, for example, privately held Controlled
Thermal Resources Ltd has hired Koch to help it extract lithium
from superhot brines https://www.reuters.com/business/sustainable-business/automakers-funding-new-tech-aimed-making-greener-lithium-evs-2021-10-07,
 moving away from technology developed by Bill Gates-backed
Lilac Solutions Inc.
    Koch said it is "still very excited about Standard Lithium's
commercialization plan," but declined further comment.
    
    LOCAL SUPPORT        
    Standard is betting its location in an industrial-friendly
community in Arkansas will help it avoid the court challenges
faced by rival U.S. projects from Lithium Americas https://www.reuters.com/business/environment/us-judge-rules-lithium-americas-may-excavate-nevada-mine-site-2021-07-24
 Corp  LAC.TO , Piedmont Lithium https://www.reuters.com/markets/commodities/piedmont-lithium-looks-abroad-amid-north-carolina-uncertainty-2022-06-22/?elqTrackId=DC25650210DC659F59D3BCAAAA5A2CA8&elqTrack=true
 Inc  PLL.O  and others. The company also plans to use Lanxess'
extensive network of pipes, rail lines and other infrastructure.
    "All of those aspects, none of our peers can point to. Most
of them don't even have a parking lot yet," Mintak said. "We
have the best shot of bringing online the first new lithium
project in the United States" in decades.
    Albemarle Corp's  ALB.N  Silver Peak in Nevada was the last
U.S. lithium mine to open, in 1966.    
    Mintak declined to be specific on timing, deferring that
announcement to publication of the company's definitive
feasibility study, expected by year's end. That report will also
outline the cost projections for the project, as well as air and
water permits. Mintak said the first phase should be producing
about 10,000 tonnes of lithium annually. The existing pilot
plant has an annual capacity of about 150 tonnes.
    Standard has started preliminary work on a second DLE
project on Arkansas land owned by Tetra Technologies Inc
 TTI.N . Tetra annually receives 400,000 shares in Standard and
$1 million as part of its agreement with Tetra.
    Tetra, which sold 1.6 million shares of Standard late last
year to pay down debt, declined to comment on Standard's
technology. Mintak said Standard has a "very healthy"
relationship with Tetra, but declined to comment on the stock
sales.   
    Standard has also started testing a new process to cut down
on the number of steps needed to make a type of lithium for EV
batteries and also sequester C02, though Mintak described those
efforts as a second-tier focus for now. 

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Standard Lithium shares hit by short seller's technology
allegations     urn:newsml:reuters.com:*:nL1N2UE1JR
FOCUS-New lithium technology can help the world go green -- if
it works     urn:newsml:reuters.com:*:nL1N2UK302
Lake Resources shares hit by short seller's lithium tech
allegations     urn:newsml:reuters.com:*:nL1N2YS1ZH
Rio Tinto to buy lithium project in Argentina for $825 mln   
 urn:newsml:reuters.com:*:nL4N2T62WN
Graphic-Stocks of companies working in lithium     https://tmsnrt.rs/3ckscNn
Stocks of companies working in lithium    https://tmsnrt.rs/3KmSJGb
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 (Reporting by Ernest Scheyder in Houston
Editing by Matthew Lewis)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))