A “highly dangerous” radioactive material that went missing in Iraq has been found dumped near a petrol station in the country’s south.

Environment Ministry spokesman Ameer Ali said it had not been damaged and there were no concerns about radiation from the material, the loss of which raised concerns it could be used to create a “dirty bomb” if acquired by Islamic State militants.

A dirty bomb combines nuclear material with conventional explosives to contaminate an area with radiation, in contrast to a nuclear weapon, which uses nuclear fission to trigger a vastly more powerful blast.

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Reuters reported last week the material had been stolen in November from a storage facility belonging to US oilfield services company Weatherford near the southern city of Basra.

A senior security official told Reuters last week that the “highly dangerous” radioactive material feared stolen in November 2015 may be acquired by the terrorist group.

“We are afraid the radioactive element will fall into the hands of Daesh [IS],” the Iraqi official said.

“They could simply attach it to explosives to make a dirty bomb.”

But, it was not immediately clear how the material ended up in Zubair, around 15 kilometres south-west of Basra.

Fears of IS having the material have been quelled. Photo: AAP

“A passer-by found the radioactive device dumped in Zubair and immediately informed security forces which went with a special prevention radiation team and retrieved the device,” the chief of security panel in Basra provincial council Jabbar al-Saidi said.

“After initial checking I can confirm the device is intact 100 per cent and there is absolutely no concern of radiation.”

The material, which uses gamma rays to test flaws in materials used for oil and gas pipelines in a process called industrial gamma radiography, is owned by Istanbul-based SGS Turkey, according to the document and officials.

The material is classed as a Category 2 radioactive source by the IAEA, meaning that if not managed properly it could cause permanent injury to a person in close proximity to it for minutes or hours, and could be fatal to someone exposed for a period of hours to days.