SYDNEY—Australian lithium miner Liontown Resources Ltd. rejected a takeover proposal by Albemarle Corp. , saying it materially undervalues the company at about 5.5 billion Australian dollars ($3.68 billion).

Liontown on Tuesday said that the A$2.50-a-share proposal was the third indicative proposal from the world’s largest lithium miner since October. The Australian company said that it previously rejected proposals valued at A$2.20 a share and A$2.35 a share.

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