Australian mining company Lynas on Thursday won a court battle against activists and will be able to begin production at an $800 million rare earths facility in Malaysia, despite health concerns.
Lynas secured the operating licence in early September but Kuantan High Court in eastern Pahang state, where the plant is based, put production on hold after an appeal by activists.
The refinery is set to become one of few sites outside of China to extract rare earths -- metals used in high-tech equipment ranging from missiles to mobile phones.
Environmentalists say the processing of rare earth ore imported from Australia would release radioactive gases and solid waste like thorium, radium, lead and small amounts of uranium into the environment.
The plant in eastern Pahang state has been dogged by protests for two years, from activists and residents who fear the radiation may damage the environment and harm health.
It has become a political issue in Prime Minister Najib Razak's home state ahead of elections, which must be held by the middle of next year.
Receipt of the temporary licence will enable Lynas to commence transportation of the ore from Australia to the plant in Malaysia. The refinery had been expected to fire up production in October.
Environmental group Save Malaysia Stop Lynas, which is spearheading the case against the mining company, said they would appeal against the decision.
"The court ruled in favour of Lynas. We plan to appeal and ask for a stay of the temporary operating licence to be extended," coalition leader Tan Bun Tet said in a text SMS message to AFP.
Meanwhile Lynas welcomed the court decision, saying: "There is no injunction or stay preventing Lynas from carrying out its operations at its Malaysian plant."
It said in a statement: "Lynas Corporation is pleased to announce that the Kuantan High Court has denied an application by parties associated with the Save Malaysia Stop Lynas group for an injunction against Lynas' temporary operating licence."
Activists and local residents have vowed to shut the plant -- the biggest outside China.
China currently supplies about 95 percent of the world's rare earths, used in high-tech equipment from iPods to missiles. Lynas hopes the Malaysian plant, which will process material from its Mount Weld mine in Western Australia, will help to break Chinese dominance of the market.
Lynas has insisted the plant is safe and said any radioactive waste it produces will only be low-level and not harmful.
But opposition politicians and environmentalists have expressed fears that the waste produced could seep into the ground and water, harming the environment and people's health.