Lynas Rare Earths, one of the world’s largest producers of the raw materials, said it had been in confidential discussions with US-based MP Materials on a possible transaction but the talks are currently “not ongoing".

The company was responding to “recent media speculation regarding a potential transaction,” it said in a statement Saturday, without elaborating on the nature of the talks with MP Materials.

The Australian company approached MP Materials with a cash-and-stock offer at a significant premium to the Las Vegas-based company’s current share price, according to people familiar with the matter, who didn’t want to be identified as they weren’t authorized to speak publicly. MP Materials earlier declined to comment.

Shares of both miners have declined in the past two years because of a global slump in demand. Markets have whiplashed from shortage fears to a surplus of inventories, prompting the mining world to stall projects and scupper deals.

Lynas said it’s implementing a “strong organic growth plan” and will continue to seek opportunities to “build scale, improve market functioning and add value for shareholders,” according to its statement Saturday.

A deal would have created a significant challenge to China’s dominance in the market.

The US has deemed rare-earth elements critical to national security as they are crucial to the production of electric vehicles, wind turbines, air conditioners and military equipment. The government is seeking to reduce China’s stranglehold over supply chains as the country accounted for 72% of total US imports of rare-earth compounds and metals from 2019 to 2022, according to data from the US Geological Survey.

Both Lynas and MP Materials in recent years have received funding from the US Defense Department to expand processing of rare-earth materials.

MP Materials runs the Mountain Pass mine in California, which is the only operational rare-earths project in the US. The Mountain Pass project is well-known by market participants as the assets run by predecessor Molycorp Inc., which years ago became a cautionary tale of the commodity boom and bust in the early 2010s.

The US government is paying Lynas $258 million to build a processing plant in Texas, and awarded MP Materials $9.6 million to fund processing and separation of light rare earths at its Mountain Pass operation.

MP Materials has been criticized in the past for having a significant Chinese investor in the company, and for sending its raw materials to be processed in China. The company had noted for years there was no capacity to process rare earths in the US, and had begun domestic processing for the first time in the third quarter of last year.