Vale has received approval for the construction of an underground mine at Voisey's Bay in the Canadian province of Newfoundland and Labrador in 2016.
Newfoundland Minister of Natural Resources Derrick Dalley said: "The sanctioning of construction for the underground mine is good news for Labrador and the entire province.
"It will extend the operating life of Voisey's Bay by at least 15 years, providing hundreds of jobs and continuity of operations at Voisey's Bay and the Long Harbour nickel processing plant."
The underground mine, which will include the Reid Brook and Eastern Deeps nickel deposits in northern Labrador, is expected to have a capacity of about 40,000t of nickel a year.
Initial construction next to the existing open-pit mine will begin in 2016.
Ore production from the mine is set to start in 2020 and is expected to remain in production past 2035.
Vale Newfoundland and Labrador vice-president Stuart Macnaughton said: "Proceeding with the underground mine expansion at Voisey's Bay marks an important milestone for our mining operations in Labrador.
"Underground mining unlocks significant value and will result in the operating life of the Voisey's Bay mine being extended."
Vale is planning procurement which will start immediately and would be managed from St John's.
In 2013, the company agreed to build the mine as part of an amended development agreement with the province.
Once operational, the mine will employ around 850 workers.