Johannesburg-based Sibanye Stillwater has announced its decision to withdraw from its planned investment in the Rhyolite Ridge lithium project in Nevada, United States, citing the dramatic decline in lithium prices as the primary reason. The company, a major player in platinum group metals and gold, revealed that updated feasibility studies indicated the project no longer met its stringent investment criteria under current market conditions.

The Rhyolite Ridge project, a joint venture with Australian-listed Ioneer, was intended to capitalize on the burgeoning electric vehicle market and the associated demand for lithium. However, the rapid and substantial drop in lithium prices, which have plummeted by over 80% since their peak in November 2022, has fundamentally altered the project's economic viability.

Sibanye Stillwater had originally committed to investing $490 million for a 50% stake in the Rhyolite Ridge project as part of a 2021 agreement with Ioneer. In addition to the joint venture, Sibanye also holds a 6% shareholding in Ioneer, representing a $70 million strategic investment made in the same year. The company stated that after a thorough review of updated project studies, it concluded that the project "did not meet the Sibanye Stillwater investment hurdle rates at prudent pricing assumptions."

The sharp decline in lithium prices is attributed to a global supply glut, triggered by a surge in production and a slowdown in electric vehicle demand growth in certain markets. This oversupply has forced numerous mining companies to either halt operations at existing mines or postpone planned projects, highlighting the volatility inherent in the battery metals sector.

Ioneer, in a separate statement, expressed satisfaction at the resolution of the pending matter, emphasizing its commitment to advancing the Rhyolite Ridge project. The company highlighted the project's critical federal permit and the secured $996 million loan from the U.S. Department of Energy, which are expected to significantly bolster its development. Ioneer also stated that the project has the potential to quadruple U.S. lithium production, underscoring its strategic importance to the domestic battery supply chain.8

"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," the company said. The company is now actively seeking a new partner to replace Sibanye Stillwater and ensure the project's successful completion.

The withdrawal of Sibanye Stillwater underscores the challenges faced by mining companies in navigating the volatile lithium market. The rapid fluctuations in prices necessitate careful risk assessment and robust financial planning, particularly for large-scale projects with substantial capital expenditures.