Rare earths miner Lynas has won its latest court battle in Malaysia and is free to keep operating after opponents lost an appeal to take away its licence.

Environmentalists from the Save Malaysia Stop Lynas group had appealed against an earlier decision to grant Lynas a temporary operating licence.

The licence allowed it to operate its rare earths processing plant, which opponents say would release dangerous chemicals that local residents would be exposed to.

The Malaysian Court of Appeal dismissed the appeal with costs in favour of Lynas.

The legal process is not over, with a judicial review of the miner's operations to be heard by the Kuantan High Court in February but it means that Lynas can keep operating the plant until then.

"Both the Malaysian government and Lynas intend to strongly defend the process undertaken by the Minister of Science, Technology and Innovation in dismissing the appeal under the Atomic Energy Licensing Act," Lynas said in a statement.

Lynas began processing rare earths, which are used in hi-tech equipment ranging from missiles to mobile phones, at the plant in eastern Pahang state in November after a delay of more than a year due to opposition over health fears.

The Lynas Advanced Materials Plant is set to become one of few sites outside China to process rare earths using metals, imported from Australia.

Lynas shares closed 4.24 per cent higher at 61.5 cents.