KUALA LUMPUR, July 6 (Reuters) - A Malaysian parliamentary committee will hold a hearing on July 16 to discuss a $96 million rare earths supply deal signed between Australia's Lynas Rare Earths and the U.S. Department of Defense earlier this year, a senior lawmaker said on Monday.

Lynas, operator of one of the world’s largest rare earths processing plants in Malaysia, has faced protests over the four-year deal, with some rights groups accusing it of supplying materials for U.S.-made weapons used by Israel in its war against Hamas in Gaza.Muslim-majority Malaysia has long been supportive of the Palestinian cause and does not have diplomatic ties with Israel.

• The hearing was aimed at ascertaining details of the deal between Lynas and the Pentagon and whether it breached any local policies, said lawmaker Wong Chen, chair of a parliamentary select committee on international relations and trade.

• Testimonies will be heard from Lynas representatives, Malaysian government officials as well as environmental groups and rights activists, Wong told reporters.

• Its outcomes will be submitted as recommendations to shape Malaysia's rare earths policy, as the country seeks investments to build its domestic industry, he added.

• "What (are these) rare earths for?... If it's for renewable energy, we will be supportive of it, but if it's for weapons, I think we should say no to it," Wong said.

• Wong was speaking after receiving a memorandum from about 50 protesters, including activists from Greenpeace and the Boycott, Divestment, and Sanctions movement, who gathered outside parliament to call for greater transparency and accountability in the rare earths supply chain.

(Reporting by Rozanna Latiff)