Approval from government agency Ibama will allow Vale to extend the Carajas railway by 786 kilometers (499 miles) and raise capacity to 230 million tonnes of iron ore per year from 130 million metric tonnes, the company said in a statement.

The railway, known as EFC, carries nearly 10 percent of the world's sea-borne iron ore exports, or about 1 billion tonnes a year, from the Amazon mine complex at Carajas to the Port of Ponta da Madeira in the state of Maranhão, Brazil.

Work on the railway expansion, a $4.1 billion project, should be completed in 2017, supporting Vale's $8.04 billion expansion of the Carajas complex. The expansion, known as S11D, is expected to begin operations in 2016.

After reporting weak third-quarter earnings, Vale said it is selling underperforming assets and halting work on a mine in the West African nation of Guinea. It is instead focusing investments on expanding production at Carajas.

Rio de Janeiro-based Vale, the world's largest producer of iron ore, will increase production by about 100 million metric tonnes a year, or 10 percent of current world iron ore exports, with the S11D project.

Expansion efforts in the state of Pará, home to the Carajas mine, have occasionally been affected by protests from Brazilian indigenous groups.