"We found the radioactive material that was lost by a Turkish... Company," Amir Ali Hassoun told AFP.
The material "still had the same properties and did not lead to the injury of anyone", Hassoun said.
He said the environment ministry will keep the material -- Iridium-192 -- until it can be returned to its owner, which another official earlier said was Turkish firm SGS.
The material was found near a wall at a petrol station in Zubair, a town near the southern port city of Basra, Hassoun said.
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Khajak Ferweer, the head of the Basra environment commission's radiation department, said the material belonged to SGS which had a contract with US oil and gas services company Weatherford.
It was Weatherford that reported it missing on November 15.
Ferweer said that exposure to the missing material, which he said amounted to at most several grams of Iridium-192, can lead to burns in the short term and cancer over a longer period, but that it cannot be used to manufacture a weapon.
The south is home to the heart of Iraq's oil industry, which supplies the vast majority of government funds, and most of the country's crude is exported via Basra.