Environment ministry has given state-run Steel Authority of India Ltd (SAIL) approval to mine iron ore at Chiria in Jharkhand, the ministry said in a statement on its website.
Chiria is essential for the future of SAIL, the statement said. Over the next 50 years, 40 percent of the iron ore requirement of SAIL will be met from the Chiria mine.
The statement said SAIL's follow-on public offer which waiting to go ahead was one of the factors weighing on the decision.
At 0647 GMT shares of SAIL traded on the Bombay Stock Exchange at 160 rupees, up 4.51 percent from a day ago, when the key 30-share index was down nearly one percent.
A SAIL spokesman said more details on the approval will be issued later in a statement.