TMC shares dip as Iceberg Research rebuts Ives upgrade

Investing.com -- Shares of TMC the metals company Inc (NASDAQ:TMC) fell 3.3% on Monday after a blistering critique by short seller Iceberg Research targeted a recent bullish research note from Wedbush Securities that upgraded the company. The upgrade, authored by analyst Dan Ives, raised TMC to Outperform from Neutral with a price target hike to $11 from $6, citing increased U.S. support for domestic critical mineral chains and recent executive orders facilitating deep-sea mining.

Iceberg, a short-selling firm which recently took a critical stance against TMC, dismissed the Wedbush report as error-ridden and misleading, starting with its characterization of TMC’s business model. According to Iceberg, "TMC’s business plan is not to process or refine the polymetallic nodules in-house. Instead, it intends to focus on mining and outsource processing and refining to third parties, such as PAMCO."

A centerpiece of the Wedbush note was the implication that TMC could benefit from a potential shift by automakers like GM and Ford toward lithium manganese rich (LMR) battery technologies, which rely heavily on manganese. Iceberg countered that the analysis confused battery chemistry trends and overlooked the broader pivot to cheaper, manganese-free lithium iron phosphate (LFP) batteries, adding, "GM and Ford also have plans to use LFP…a fundamental threat to TMC."

The critique sharply disputed claims made about rare earths, a term mentioned 13 times in the Wedbush note, including assertions that TMC has strategic importance in that sector. Iceberg pointed out that TMC is not active in the rare earth business, stating, "You won’t find the term ‘rare earth’ mentioned even once in TMC’s latest corporate presentation. It is mentioned once in the latest 10-K in a paragraph unrelated to TMC’s business."

Discrepancies were also flagged in reported grades of critical minerals like nickel and copper in seafloor nodules, with Wedbush citing figures significantly higher than those disclosed by TMC. Iceberg noted that TMC reports nickel grades of 1.29%-1.43%, far from the 3% stated in the broker’s report, and copper at just above 1%, not the 18% claimed.

Further criticism targeted the report’s assertions about China’s readiness to launch commercial deep-sea mining. Contrary to Wedbush’s suggestion that China has commenced such operations, Iceberg clarified, "China has not started deep-sea mining, in fact, no one has," citing ongoing environmental trials and pilot testing schedules for 2025-2026.

The note also raised legal and logistical concerns about TMC’s reliance on PAMCO for processing, noting both regulatory risk in Japan and cost challenges. Iceberg emphasized that PAMCO has publicly conditioned its cooperation on adherence to international law under the International Seabed Authority, complicating Wedbush’s narrative of a fast-tracked production path via U.S. executive order.

As scrutiny intensifies and market sentiment recalibrates, TMC’s prospects appear increasingly tethered to geopolitical, legal, and technological uncertainties. Investors are left weighing bullish ambitions against skepticism around the feasibility and legality of commercially harvesting metals from the ocean floor.