The company closed both of its blast furnaces last year and said they would be replaced by an electric arc furnace, as part of its transition to greener production methods.
Tata Steel's application was given the go-ahead on Tuesday morning at a meeting of Neath Port Talbot Council's planning committee.
Plans for a new electric arc furnace in Port Talbot have been approved by the local planning authority.
Rajesh Nair, chief executive of Tata Steel UK, said the company was "committed to begin large-scale work on site this summer".
The closure of the blast furnaces have seen nearly 3,000 jobs lost, but Tata says 5,000 UK-based jobs have been saved, with on-site CO2 emissions cut by 90%.
