Thousands rallied Sunday in Malaysia against an Australian miner's rare earths plant in the biggest protest yet over fears it will produce radioactive waste harmful to them and the environment.

Australia's Lynas has almost completed building the plant near the seaside town of Kuantan in eastern Pahang state to process rare earth ores imported from Australia.

China currently supplies about 95 percent of world demand for rare earths, which are used in high-tech equipment from iPods to missiles and have seen prices soar in recent years.

Lynas hopes to begin operations within months, producing an initial 11,000 tonnes of rare earths a year and effectively breaking the Chinese stranglehold on the materials.

But more than 5,000 people, many wearing green and holding banners reading "Stop pollution, stop corruption, stop Lynas," gathered in Kuantan to call for the plant to shut down, chanting "We want Lynas to close down".

Lee Tan, an activist who helped organise the rally, said: "The plant is dangerous because it produces huge amounts of waste that is radioactive," adding residents were worried the waste could leak into the ground and water.

Opposition leader Anwar Ibrahim also attended the protest and his colleague Fuziah Salleh said the plant should be relocated "in the middle of the desert".

"The green rally is in support of sustainable development and Lynas is definitely not a sustainable development," she told AFP.

Police often intervene at rallies in Malaysia but did not do so on this occasion, although they were on standby.

Hundreds gathered elsewhere in Malaysia, including in Kuala Lumpur.

Lynas' website was also hacked with a Malaysian flag and the slogan "Stop Lynas, Save Malaysia" replacing the usual site.

Lynas has insisted the plant is safe, and any radioactive waste it will produce will only be low-level and not harmful to human health.

It is receiving a 10-year tax break for the plant, and has said having it in Malaysia offers better economics than Australia.

The government has said it is monitoring the plant closely to ensure its safety.

On Tuesday the Kuala Lumpur high court will start hearing an activist challenge to block the plant.

Opponents point to a similar rare earths plant in Malaysia's northern Perak state which was forced to shut down in 1992 over protests from residents who blamed it for birth defects in nearby populations.