* Prices for rare earths have jumped amid Sino-U.S. trade tensions

* Lynas is only major proven producer of rare earths outside China

* Says it is stockpiling key rare earth for "strategic" customers (Adds Lynas dispute with Malaysian govt)

MELBOURNE June 21 (Reuters) - Australia's Lynas Corp said it was stockpiling production of a major rare earth element, with prices jumping in recent weeks as supply concerns mount amid trade tensions between China and the United States.

The miner said its decision to stockpile Neodymium Praseodymium (NdPr), used in industrial magnets, for "strategic customers" was to help it consolidate its position as a preferred supplier to customers outside China.

Lynas is the only major proven producer of rare earths beyond China, at a time where markets are concerned that Beijing may use the minerals as a weapon in its trade war with the United States.

China's state media warned last month it may curb exports to the United States of rare earth metals, a group of 17 minerals used in a wide-variety of military equipment and high-tech consumer electronics.

Lynas mines rare earths in the state of Western Australia and ships them for processing to Malaysia, where it is in dispute with the government over waste disposal ahead of a licence renewal that is due on Sept. 2.

Lynas said production this quarter was at a similar level to the March quarter, adding that the company would have about 250 tonnes of NdPr stockpiled at the end of the quarter.

"We ... expect to continue to slowly build inventory ahead of a further uplift in demand in 2020," the company said in a statement.

Shares in Lynas climbed as much as 6.4 percent to their highest in nearly a week. The broader Australian market was largely flat.

Lynas said its appeal against the Malaysian government's new licence conditions would be heard on June 28, after the Southeast Asian nation's environment ministry attached new conditions regarding the removal of low level radioactive residues late last year. (Reporting by Nikhil Kurian Nainan in Bengaluru and Melanie Burton in Melbourne; Editing by Stephen Coates and Joseph Radford)