Scuttled in an emotionally-charged national elections year, yet impinging on the flow of foreign direct investments, Malaysian authorities through its Atomic Energy Licencing Board (AELB) and the Science, Technology and Innovation Ministry (Mosti) has granted the Australian mining firm Lynas the highly coveted temporary operating licence (TOL) to proceed with the controversial $200 million rare earths processing plant in the province of Gebeng, Kuantan.

"The application has been approved but is subject to a number of conditions and will be suspended or revoked if those conditions are breached, and a reapplication will not be entertained," the two Malaysian government agencies said in a joint statement. Among these conditions include a plan for a permanent disposal facility (PDF) and paying the government a $50 million security bond in installments, the AELB said.

Malaysia wants Lynas Corp. to submit all the details relative to the plans and location of the PDF, subject for approval, within 10 months of the TOL's issuance date.

Immediately, members of Malaysia's political opposition have called for a judicial review .

"I am disappointed, but I expected this move from the Malaysian government," Fuziah Salleh, an opposition member of parliament for Kuantan, said.

"The main issue is the permanent disposal facility, the government has asked for the waste to be shipped back to the source -- which is Mt Weld but Australia has said it will not take the waste back. So Malaysians are stuck with it at the expense of profits for Lynas."

But the AELB and Mosti, as part of conditions of the miner's TOL, said the residue management will be "under the sole responsibility of the company which includes returning the residue to its original source if necessary."

The TOL effectively enables Lynas Corp. to immediately commence operations at the LAMP advanced materials refinery plant, already 91 per cent completed. The Malaysian plant will process the rare earths minerals extracted from its Mount Weld deposit in Western Australia.

Last week, the Australian miner announced it has raised $225 million in bonds to complete Phase One of the plant. It also said operations will be likely delayed to the second quarter of the year.

Lynas Corp. may expect to receive a permanent operating license within two years once it complies with the monitoring and government-oversight requirements of the TOL.

Shares of Lynas Corp. surged 15 per cent on Wednesday, the most since Sept. 27, to $1.64, immediately after the release of its TOL was announced.

In a report on Nov. 16, Lynas Corp. said its plant would become the world's largest refinery of the minerals at 22,000 tonnes capacity per year should a second phase be approved and completed.

Once in full operation, Lynas Corp. may account for 39 per cent of the world's supply outside of China, the world's stronghold of rare earths, supplying more than 90 per cent of global output.

Japan is counting on Lynas Corp. to supply 8,500 tonnes a year of rare earths by early 2013 to the country.

Last year, China slashed its rare earths exports quota.Chinese exporters of rare earths elements will be allowed to sell 10,546 tonnes of in the first six months of 2012, a 27 per cent reduction from the quota set for the first half of 2011.