Trade Minister Mustapa Mohamad said the government had decided to form the international panel after listening to public concerns over the plant, which is being built by the Australian mining company Lynas in Malaysia's Pahang state.

Lynas has described the facility as the largest of its kind in the world and the plant is set to be one of the few sources of rare earths -- used in everything from wind turbines to computer screens -- outside China.

Campaign groups and residents, however, have expressed concerns over the environmental and health implications, saying the Lynas Advanced Materials Plant in the town of Kuantan will produce huge quantities of radioactive waste.

A similar facility built by a Japanese firm in another part of Malaysia was forced to shut down in 1992 due to protests.

Mustapa said the panel would have one month to investigate and submit its findings to the government.

The government would hold off on issuing a pre-operating licence to Lynas and bar imports of raw materials to be processed at the facility until the panel reported its findings, Mustapa said at a news conference.

The government would also carry out stricter monitoring of the facility's construction to ensure that international safety standards were met.

Rare earths such as super-magnet dysprosium and red-glowing europium are vital components in hard-drives and computer screens, while the metals are also pivotal in making laser missile systems, wind turbines and solar panels.

The plant, which is due to come online in the third quarter of this year, will refine raw materials extracted from Western Australia.

World attention has shifted to Australia's nascent rare earths industry after China, which dominates global production, began restricting exports, sending shudders through major consumers Japan, Europe and the United States.

In December, the United States called on China not to use rare earths as a "trade weapon" after Japanese industry said Beijing temporarily cut off exports in 2010 amid a territorial row.

China, which produces more than 95 percent of the world's rare earths, has denied any political motivations, insisting the restrictions on exports were due to environmental concerns and the need for a more sustainable approach.

This year the Asian giant has also tightened its grip over the industry by setting tough emissions limits on miners producing the lucrative metals.

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