The George Town Council has approved the planning application for a veneer, plywood and woodchip mill to be built at Bell Bay.
The $54 million mill will be built on an existing industrial site at 17 Bell Bay Road, with modifications being added to the site including log cutting lines, a shredder, rotary peeling lathes and wood chipper.
The building of the mill has also been approved by the Environmental Protection Authority of Tasmania.
The mill is expected to produce about 80,000 tonnes of wood chips and 93,000 cubic metres of veneer and plywood.
Wood is expected to be sourced from both plantations and natural forests.
Greens leader Cassy O'Connor has criticised the proposed mill questioning the sourcing of wood from natural forests.
Ms O'Connor also criticised mill owners Patriarch and Sons over their connections with Shin Yang Group of Companies who she claims have questionable logging works in Borneo.
Both the EPA and council have not considered concerns about using natural forestry relevant to their assessment processes.
Construction of the mill is predicted to employ 30 people, and the mill itself is expected to employ 109 full-time workers.
Construction will take place over three stages, with initial works beginning in late July.