Australian rare earth miner Lynas has described the first production from its controversial Malaysian processing plant as "disappointing".

In the company's first earnings report since it begun a three year process of construction and licensing, Lynas earned $600,000 for the June quarter on the back of weak prices.

Lynas sold its rare earths for the equivalent of a little over five dollars a kilogram. Production costs, however, were almost 20 dollars a kilogram.

Eric Noyrez, Lynas' CEO says the result is disappointing.

"Rare earths market volumes and prices have been extremely challenging for the past six months," Mr Noyrez said.

Lynas sold 117 tonnes of refined product in the period - a long way short of its phase one target of 11,000 tonnes for the year

It reported equipment problems and processing times that were longer than expected.

Its refinery in Kuantan, Malaysia is still operating under a temporary licence until plans for a permanent waste disposal facility are approved.

Mr Noyrez says the plan was submitted in early July.

"It was a condition of our temporary operating licence that we submit this documentation within ten months of the granting of the licence," he said.

"And the documents are now being reviewed by the Malaysian Atomic Energy Licencing Board."

The absence of a plan for waste disposal was one of the issues which pitted the local community against the building of the refinery.

Lynas had gone all the way to Malaysia's High Court to remove local challenges to its right to operate in Kuantan.

Two appeals against its licence were lodged by residents. The second appeal was withdrawn only last Friday after the first was dismissed.

Lynas built its Malaysian plant with the aim of breaking China's stranglehold on the rare earths market, which accounts for about 90 per cent of global supply.

Local people have vowed to continue their 'Stop Lynas' campaign.

Mr Noyrez is happy to be under way and expects production and prices to improve.

"We have a slow start and I want to recognise it and not hide it," he said.

"We are confident we have identified the right solutions to enable us to increase production over the coming quarter."


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