Adds Ioneer reaction, details in paragraphs 6-9

Feb 26 (Reuters) - Sibanye Stillwater SSWJ.J said on Wednesday it will not go ahead with plans to invest in the Rhyolite Ridge lithium project in the U.S. state of Nevada, after the price of the rare metal plunged.

Johannesburg-based Sibanye said after reviewing updated studies on the planned lithium mine, a decision was taken not to proceed with additional investments.

The lithium project "did not meet the Sibanye Stillwater investment hurdle rates at prudent pricing assumptions", Sibanye said, giving no further details.

The price of lithium, used to make batteries which power electric vehicles, has plunged more than 80% from its peak in November 2022 after a supply glut, forcing companies to mothball mines and freeze projects.

Sibanye agreed to set up the lithium joint venture with Australian-listed Ioneer INR.AX in 2021 as part of its diversification into battery metals.

Under the 2021 agreement with Ioneer, Sibanye was expected to invest $490 million for its 50% interest in the Rhyolite Ridge project. Sibanye also has a 6% shareholding in Ioneer after making a strategic $70 million investment in 2021.

In a separate statement, Ioneer said it was "pleased to have this pending matter resolved, enabling us to progress the fully permitted project to a final investment decision".

Ioneer said the project, which could quadruple U.S. lithium production, had secured a crucial federal permit and had finalised a $996 million loan from the U.S. Department of Energy.

"Ioneer’s focus remains on bringing this world-class project online and will look to move forward with a strong equity partner who can help see the project into production," it said.

(Reporting by Nelson Banya and Felix Njini; Editing by Jacqueline Wong, Lincoln Feast and Sharon Singleton.)

((Nelson.Banya@thomsonreuters.com;))