Australia should “look closely” at expanding its role in the global nuclear energy industry, including leasing fuel rods to other countries and then storing the waste afterwards, Malcolm Turnbull has said.

But the prime minister said he was “sceptical” about whether Australia would ever build its own nuclear power stations to provide electricity to domestic customers, given the country had plentiful access to coal, gas, wind and solar sources.

Turnbull made the observations in a radio interview on Wednesday, a day after he named Dr Alan Finkel, a vocal advocate of nuclear power and the outgoing chancellor of Monash University, as Australia’s next chief scientist.

He was asked to weigh in on the issue during a visit to South Australia, where the state Labor government has launched a royal commission into options for participation in the nuclear fuel cycle. Turnbull praised the premier, Jay Weatherill, for setting up the inquiry.

“I was just talking about this with the cook in the cafe downstairs, when I was having some coffee and breakfast with Steve Marshall [the SA Liberal leader],” he told Adelaide radio station FiveAA.

“As Brett, the chef, was saying, and I think a lot of South Australians feel like this and it’s a perfectly reasonable view: we’ve got the uranium [and] we mine it; why don’t we process it, turn it into the fuel rods, lease them to people overseas; when they’re done, bring them back – and we’ve got very stable geology in remote locations and a stable political environment – and store them?

“That is a business that you could well imagine here.”

The Australian Conservation Foundation described Turnbull’s comments as “ill-considered” and warned that radioactive waste was “a complex and contested policy area”. “Radioactive waste presents serious environment, security and public health challenges – and it lasts a lot longer than any politician’s tenure,” said Dave Sweeney, a foundation campaigner. Greenpeace dismissed nuclear power as “an expensive distraction from the real solutions to climate change, like solar and wind power”. “It leaves a legacy of radioactive waste which remains dangerous for hundreds of thousands of years,” said Emma Gibson, head of program for Greenpeace Australia Pacific. “We only have to look at the Fukushima disaster in Japan to be reminded of the health, social and economic impacts of a nuclear accident, and to see that this is not a safe option for Australians.”