Australia's proposed $230-million rare earths production facility in the Pahang state in Malaysia needs further environmental assessment, the Malaysian government said.

The Malaysian government has called on an investigation that would assess further the environmental impact of a planned rare earths refinery plant by an Australian company in Pahang state.

On the celebration of Earth Day, Trade Minister Mustapa Mohamad had announced that the government will form an international panel to evaluate further Australia's Lynas.

Targeted as one of the largest producers of the raw material rare earths used primarily for the production of electronic and other devices would cost the Australian firm about $230 million in investments.

However, residents and environment groups in the country are concerned of their environmental impact for the medium to the long term.

In 1992, a similar facility in another Malaysian state has been forced to shutdown due to protests.

The international panel of investigators will be given a month to come up with a comprehensive report on the rare earths facility.

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

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