Malaysia PM says cannot force rare earths firm Lynas to leave country

A general view of the Lynas Advanced Materials Plant in Gebeng, Pahang

KUALA LUMPUR (Reuters) - Malaysia cannot force rare earths miner Lynas Corp to leave despite opposition from some people who fear the risk of radioactivity from waste at the firm's processing plant, the nation's state news agency cited the prime minister as saying.

The Australian company has been running the plant in Malaysia since 2012 using rare earths mined from Mount Weld in Western Australia. The Malaysian government is expected to make a decision on renewing its operating licence by mid-August.

Talking to reporters on Thursday during a visit to Japan, Prime Minister Mahathir Mohamad said the 600 Malaysian employees at the plant in the state of Pahang were not afraid to keep working there, according to Malaysian state news agency Bernama.

"We invite them and then we kick them out. Others will say the country made a promise but, when there is a problem, we kick them out ... we cannot do that," he was quoted as saying by Bernama.

Lynas shares were up 3% at A$2.89 on Friday.

Reuters reported on Monday, quoting two sources with direct knowledge of the matter, that the Malaysian government planned to extend Lynas' licence to operate the plant by a Sept. 2 deadline, though it could be for a shorter duration than the usual three years.

A decision to renew the licence is important for the market for rare earths, as Lynas is the biggest producer outside China. Beijing has in the past tightened supply of the materials, used in everything from military equipment to high-tech consumer electronics.

Mahathir said expert studies had indicated that the waste was not hazardous to health and that he believed there was a way to further reduce radioactivity, without giving further details.

"There are quarters who do not accept the experts' decision," Mahathir said. "This poses a problem, if we ask the experts to make the study, but we reject it. What is the purpose of asking the experts to make the study?"

(Reporting by Krishna N. Das; Editing by Joseph Radford)

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