By Ernest Scheyder and Clara Denina (Reuters) -Rio Tinto has been holding talks to buy lithium miner Arcadium, three sources with direct knowledge of the negotiations said, a deal that would make Rio the third-largest producer of the electric vehicle battery metal.

Arcadium Lithium (ALTM), and Sociedad Quimica y Minera, or SQM (SQM), jumped Friday following a report that mining giant Rio Tinto (RIO) could be looking to buy a company in the lithium sector.The Australian wrote,

Rio boss Jakob Stausholm has given investors every reason to believe reports that a lithium deal is imminent. No Rio Tinto shareholder should be surprised if a big lithium acquisition emerges this week from the takeover speculation based on the trail of breadcrumbs laid out by Rio chief Jakob Stausholm.

Rio Tinto in talks to acquire Arcadium Lithium, potentially becoming the third-largest producer of EV battery metal.

Talks have been ongoing and continued in London this week during the LME Week conference, one of the sources said. An offer is expected to come in the near future, according to the second source. Talks are ongoing and may not necessarily result in a deal,

Riordan and Teran aren’t trying to quash a potential takeover, but they say it has to be at the right price - and that Rio needs to be thinking around the $US8 billion mark.

Potential major lithium acquisition by Rio Tinto Group has boosted industry stocks despite recent market decline. Explore more details here.