SYDNEY -- Australian conglomerate Wesfarmers has dropped its bid to acquire compatriot and rare-earth metals miner Lynas, it said, after U.S.-China trade tensions surrounding the elements drove up the target's value.

Wesfarmers said Thursday it has been "unable to progress" its March 26 proposal to buy Lynas for 2.25 Australian dollars per share -- about AU$1.5 billion ($1.02 billion) in total -- and "does not intend to pursue it further." The offer gave a premium over the share price of AU$1.55 the day before the offer.

But Lynas is one of very few non-Chinese suppliers of rare earths, which Beijing has sought to use as leverage in its trade war with the U.S. In late May, amid predictions of a clampdown on China's U.S.-bound exports of the metals, Lynas' share price surged past Wesfarmers' offer price and has remained above it since. The view took hold that -- in the words of a source close to the deal -- the purchase was no longer worthwhile for Wesfarmers.

Meanwhile, Lynas shares lost 6.2% Friday to close at AU$2.27.

China produces 80% or more of the world's rare earths, which are used in applications ranging from magnets, lasers and superconductors to camera lenses and cancer treatments, but are difficult to produce and process into a useful form. China's market dominance makes it a source that other markets, like the U.S., depend on.

Lynas is currently the only non-Chinese company that has the technology to separate and extract the 17 rare-earth metals from ore and is producing them on a large scale.

Lynas supplies about 30% of the rare earths used in Japan. In May, Lynas proposed to team up with American chemical company Blue Line to build a rare-earths separation plant in the U.S. state of Texas, a venture expected to strengthen supply frameworks for the U.S. and beyond.