A Malaysian group representing villagers and civil groups will file a legal challenge to the government's decision to approve a massive rare earths plant by Lynas, the Australian mining company .

The Atomic Energy Licensing Board announced late on Wednesday it would grant Lynas a license to operate the first rare earths plant outside China in years, despite public protests over fears of radioactive pollution.

It said Lynas must submit plans for a permanent disposal facility within 10 months and make a $50mn financial guarantee.

Malaysia hopes the Lynas plant will spur growth. But the project has been the subject of heated protests over health and environmental risks posed by potential leaks of radioactive waste.

Florence Looi reports from the eastern Malaysian city of Kuantan.