A West Australian company has been granted a lease to mine iron ore in Tasmania's Tarkine region on the west coast.
Venture Minerals says it is a significant step towards building the project at Riley Creek, near Tullah.
But the project still needs environmental approval.
Resources Minister Bryan Green says the Commonwealth and State are working together.
"It just needs the environmental approvals now," he said.
"This is a very significant next step, so it is important that people understand that there is another process to be followed and that's environmental approvals.
"But we're able to do that on a bilateral basis." The Riley mine is expected to employ 60 people and will help fund a bigger tin mine at Mount Lindsay, worth about $200 million.
In a statement to the stock exchange, Venture Minerals says the the deposit is on the surface, reducing operating costs.
It does not produce rock waste or need a tailings dam required and there will be no remnant open pit at the end of mining.
Managing director Hamish Halliday says the company is delighted with the second lease.
"The granting of a mining lease at Riley is particularly important as the deposit is located less than two kilometres from a sealed road making it very cost effective to bring into production," he said.
Earlier this week, Shree Minerals gained final approval for an open-cut mine in the Tarkine.