Shares in Australian miner Lynas soared today after Malaysia gave the green light for a controversial rare earths plant to be be built despite fears it could produce harmful radioactive waste.

The facility, which is near completion in the eastern state of Pahang, is set to become one of the few sites outside China to process rare earths - metals used in high-tech equipment ranging from missiles to mobile phones.

Malaysia’s Atomic Energy Licensing Board granted a temporary licence for the plant to begin operations for an initial two-year period under strict safety requirements.

But it made clear it could be suspended or revoked if the company failed to meet conditions on handling potentially hazardous waste, which is naturally present in rare earths.

Lynas shares surged nearly 20 percent on the news in early trade to A$1.60.

“Lynas recognises its responsibility to the community to operate the plant in a safe and sustainable manner,” the company's executive chairperson Nicholas Curtis said in welcoming the approval.

Lynas has always insisted the plant, which will handle rare earths imported from Australia, will be safe, but critics say radioactive waste could leak out, threatening public health and the environment.

First production is expected in the second quarter of calendar 2012.

Currently, China produces more than 95 percent of the world's rare earths - 17 elements critical to manufacturing everything from iPods to low-emission cars.

But Beijing has angered its trade partners by restricting overseas shipments in a bid to burnish its green credentials and tighten its grip over the metals, leading other countries to explore alternative sources.

- AFP