Sweden's government on Tuesday gave its go-ahead for a controversial mining project in the country's far north, sparking ire from activists who argue it would harm the environment and the indigenous Sami people.

Jokkmokk Iron Mines, a British-owned company that filed an application for the Kallak mine in 2013, is eyeing Sweden's largest-known cache of untapped quartz-banded iron ore as well as rare earth minerals.

The company still has to win approval from a Swedish environmental court, and the government's green light came with a long list of conditions attached.

But Tuesday's decision was a step forward after years of legal battles.

Critics have warned that a mining operation risked destroying the area's pristine forests and lakes and would disturb the Sami's traditional reindeer herding.

Industry Minister Karl-Petter Thorwaldsson said the site in question -- outside the small town of Jokkmokk -- had been designated a site of "national interest for both valuable substances or materials and reindeer herding".

The government had therefore approved the project with "far-reaching and unique conditions".

He described the conditions as "many and comprehensive," noting that mining permits were usually granted without conditions.

Among them were a requirement that the mine use as little space as possible, and that initial construction be done during times of the year when the effect on reindeer herding, which relies on vast areas of land, was minimised.

The company would also need to compensate affected reindeer herders, complete annual reviews of the impact for reindeer herding, and commit to restoring the area to allow reindeer herding again once the mine was depleted.

Thorwaldsson noted that in addition to the government's exploitation concession, the project still needed to be approved by legal instances and impact studies before mining operations could begin.

Shares in British company Beowulf Mining, which fully owns Jokkmokk Iron Mines AB, soared on the announcement, rising over 70 percent on the London Stock Exchange.

Meanwhile, opponents, including climate activist Greta Thunberg, were dismayed by the news.

"Sweden today confirmed its shortsighted, racist, colonial and nature-hostile approach," Thunberg, who travelled to protest against the mine on site in February, said in a post to Twitter.

"Sweden pretends to be a leader for environment and human rights, but at home they violate indigenous rights and continue waging a war on nature," she added.

Mikael Kuhmunen, a local Sami community leader, told news agency TT he was "shocked" and "disappointed" by the announcement.

"We still don't know if there will even be a mine, but it's looking pretty grim right now," Kuhmunen said.

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