An Australian mining company has been told to "get lost" and "go back to Australia" amid an ongoing row over hundreds of thousands of tonnes of radioactive waste piling up in Malaysia.

Key points: Malaysia has renewed the rare earth plant licence of Australian company Lynas

Malaysia has renewed the rare earth plant licence of Australian company Lynas Green groups say Lynas' activities pose a threat to the local environment

Green groups say Lynas' activities pose a threat to the local environment Lynas says it will meet the licence obligations set by Malaysia's Government

Outside of China, the Australian firm, Lynas, is the world's only major producer of rare earth minerals, which are crucial in the production of high-tech gear including smartphones, laser-guided missiles and electric car batteries.

The ore is dug up at Mount Weld in Western Australia and then shipped to Malaysia, where the cost of processing is significantly lower.

The low-level radioactive waste is a by-product of the enrichment process and Malaysian activists are convinced it poses a threat to local communities.

Lynas has had its license to operate in Malaysia extended for six months. ( ABC News: Phil Hemingway )

At a recent protest in Kuantan, several hundred people rallied against the Australian firm and Malaysian Prime Minister Mahathir Mohamad's decision to extend its licence to operate.

"[The radioactivity] will be passed through our children and our children's children," said Moses Lim, a chemical engineer turned activist.

"We may be gone, but our grandchildren will curse us."

Mr Lim claimed the issue had the potential to "tarnish the good name of Australia" in the minds of millions of Malaysians.

"I don't understand why Lynas, an Australian company, does this to Malaysia," he said.

But the Prime Minister, 94-year-old Dr Mahathir, dismissed criticism of Lynas' operations in Malaysia.

"It's not Chernobyl. This isn't going to be dangerous," he said.

'We just have to accept this fate'

The issue has split the local community, which relies on the hundreds of high-paying jobs that the processing facility provides.

At a local fish market in Kuantan, a mother who declined to offer her name told the ABC she feared radioactive contamination from the facility would make its way into her food.

"I am scared, but I have no choice but to buy the fresh fish from here. We just have to accept this fate," she said.

"I think Lynas should be shut down for the sake of the surrounding environment."

"The accusations against Lynas are political," local fisherman Raja Harris bin Raja Salleh said. ( ABC News: Phil Hemingway )

But other locals said there was nothing to worry about, blaming politicians for trying to capitalise on the issue by whipping up fear in the community.

Raja Harris bin Raja Salleh, the chief fisher in Balok village, said the residents are "not at all scared".

"Lynas is the same as other agencies and factories that produce chemicals. The accusations against Lynas are political," he said.

Toxic waste becomes a toxic issue

The issue of Lynas' radioactive waste has become politically toxic for the Mahathir-led coalition.

Members of the opposition vowed to close the Australian plant.

Now in government after last year's shock election result, the ruling party extended the plant's license.

Lynas' Malaysia plant processes rare earth minerals, which are used in tech and batteries. ( ABC News: Phil Hemingway )

Lynas is allowed to keep operating its plant and has been given six months to find a suitable site within Malaysia to permanently dispose of 580,000 tonnes of low-level radioactive waste currently stockpiled at the Kuantan facility.

The company has also been given four years to relocate its cracking and leaching processing operation — which creates the radioactive waste — to Western Australia.

Wong Tak, a Malaysian Government MP who attended the Kuantan protest, said the cabinet decision to extend the licence was a "great disappointment".

The long time anti-Lynas campaigner claimed the issue was serious enough to fracture the Mahathir-led Pakatan Harapan, or Alliance of Hope, Coalition.

"[The anti-Lynas movement] brought down the previous government after 60 years," he said.

MP Wong Tak (centre) held a protest against Lynas' presence in Malaysia. ( ABC News: Phil Hemingway )

"I know the majority of backbenchers are with us, and I will even say the majority of the cabinet are with the people."

Dr Mahathir has taken a pragmatic approach to the issue, saying the decision to extend the licence was based on expert advice, not the "popular view".

"Either we get rid of the industry and lose credibility in terms of foreign direct investment, or we can take care of the problem," he said.

Lynas says operation has been politicised

In a statement to the ABC, Lynas said the renewal of the licence to operate in Malaysia "provides a clear pathway for our continued operation".

"We have strong support from our people and our local communities and we are confident of meeting the licence conditions," a company spokesman said.

Last week, Lynas CEO Amanda Lacaze said she was optimistic the "politicisation" of Lynas would finish, pointing out the company spends more than $200 million in the local economy each year.

Australian mining company Lynas says its work in Malaysia has been politicised. ( Reuters: Lim Huey Teng )

Australia's High Commissioner in Malaysia, Andrew Goledzinowski, has accused opponents of the Lynas facility of putting forward "misleading statements".

Amid calls for Australia to take back the waste, Mr Goledzinowski told Malaysian radio BFM "nobody" does that.

"The universal model is that when you bring in raw materials and when you process them in your own country, you deal with them in your own country," Mr Goledzinowski said.

"We import petroleum from Malaysia. One of the residues of petroleum is a thing called 'sludge and scale'. It is 10 times more radioactive than anything that Lynas produces. And we bring that from Malaysia. We don't send it back."

The fate of Lynas in Malaysia is being keenly watched around the world amid concerns rare earth materials could become a bargaining chip in the ongoing US-China trade war.

In 2010, the Chinese supply of rare earths to Japan suddenly stopped for two months following a territorial dispute over Japan's claim to the Senkaku Islands, which angered China.

The construction of the Lynas plant in Malaysia was largely funded in 2011 by Japan, which needed a reliable supply of rare earths.

China currently holds a near-monopoly on the production of rare earth minerals, with Lynas producing about 13 per cent of global supply.

Editor's note: This story was amended on August 22 to correct a caption that claimed to show radioactive waste at the Lynas plant that was in fact the non-radioactive by-product NUF, and a caption that stated Lynas operates a mine in Malaysia. It does not.