(Adds quotes, background) KUALA LUMPUR, Feb 15 (Reuters) -...

(Adds quotes, background)

KUALA LUMPUR, Feb 15 (Reuters) -

Malaysia said on Wednesday Australian miner Lynas Rare Earths (LYC) could have its operating license revoked if it fails to comply with conditions prohibiting the production of radioactive waste in the country.

Lynas said this week Malaysian regulators renewed its unit's license for three years but retained conditions that prevented it from importing and processing rare earths concentrate after July 1.

This would require Lynas - the world's biggest producer of rare earths outside China - to close the cracking and leaching part of its rare earths processing plant, the company said.

Malaysia's Science, Technology and Innovation Minister Chang Lih Kang said the decision was made to prevent the production of radioactive waste from cracking and leaching.

Since 2012, Lynas has produced approximately 1.08 million metric tonnes of radioactive waste - an amount expected to reach 1.2 million metric tonnes by July 2023, Chang told reporters.

		"(We) understand the importance of the rare earth 
industry. However, no party has the right to continuously 

produce radioactive waste in our homeland," Chang said, adding that Lynas must comply with all license conditions to continue operating.

Lynas has said that its plant is safe and had asked for the conditions to be removed. It also plans to appeal the Malaysian government's decision.

Two International Atomic Energy Agency reviews found the plant to be low risk and compliant with relevant regulations, Lynas has said.