Rio Tinto is able to push ahead with a big new bauxite project near Weipa in Queensland, after federal Environment Minister Tony Burke gave it conditional approval.
Known as the South of Embley project, it will allow Rio's existing bauxite operations near the Gulf of Carpentaria to expand to the south side of the Embley River.
The $US1.45 billion project has been at the centre of a political standoff between the conservative government in Queensland and the federal government.
Queensland approved the project a year ago but Mr Burke intervened and demanded further investigations into the project's impact on shipping traffic through the Great Barrier Reef
Mr Burke approved the project on Wednesday with 76 conditions, many of which related to protection of animals such as dugongs, turtles and dolphins.
"The conditions I have imposed will ensure that shipping activity arising from this project does not negatively impact the outstanding universal value of the Great Barrier Reef, and meets the highest international standards in its planning, regulation, assessment and operation," Mr Burke said.
But a green light from Mr Burke does not ensure the project will go ahead; the Rio Tinto board will deliberate over whether to approve it, and the company is more cautious about spending money than it was when it first announced the project.
UNESCO has warned the reef is close to being placed on its "in danger" list at next month's World Heritage Committee meeting.
In a report released earlier this month, UNESCO said the federal and Queensland governments had failed to improve water quality or halt coastal developments.
Green groups say the Rio Tinto mine expansion would mean 900 extra ships a year crossing the reef.