By Liz Lee
KUALA LUMPUR (Reuters) - Malaysia's government said on Wednesday its decision last month to extend a licence for Australia's Lynas Corp for processing rare earth minerals aimed to show investors that the Southeast Asian nation was open for business and preserve 600 jobs.
Some politicians within Prime Minister Mahathir Mohamad's ruling coalition had promised to halt the firm's operations when campaigning in the May 2018 election, after concerns were raised by politicians and activists about the production of radioactive waste from the process.
Lynas, the largest rare earths producer outside China that sells most of its products to Japan, says the low-level radioactive waste is not hazardous.
The government said last month it was extending the firm's licence, a move that sparked protests from activists and politicians even though it set tougher terms and offered a six-month extension that was shorter than usual.
Outlining reasons for the government's decision, the prime minister's office said closing the operation would lead to more than 600 local employees losing their jobs and it would have a "negative impact on Malaysia's credibility as a business-friendly country".
The prime minister's office also said in the statement that failing to extend the licence would mean Malaysia would be "unable to break the Chinese monopoly as the sole exporter of rare earths".
China has a tight grip on the rare earths market, as the world's biggest producer of the minerals that are used in smartphones and other consumer electronics, and also used in the defense industry and other sectors.
The U.S. Department of Defense has been in talks with Australia to host a facility that would process rare earth minerals in an effort to reduce reliance on China for the specialized materials.
Activists in Malaysia have urged the government to review the decision to extend the licence for Lynas.
"We hope they can re-examine their mistakes and start to serve the interests of the people," Tan Bun Teet, chairman of non-government group 'Save Malaysia Stop Lynas', told Reuters.
(The story corrects second graph to show some ruling coalition politicians had anti-Lynas position, not PM's party.)
(Reporting by Liz Lee; Editing by Edmund Blair)