Iluka had feared construction of new sidings and loading facilities at Hamilton and Hopetoun could be delayed into the new year due to a slow state government response to its permit applications.

A total of $6 million will be spent on infrastructure to transport heavy mineral concentrate from the company's Kulwin mine near Ouyen, with truck traffic to drop sharply as a result.

Iluka's general manager of Australian operations, Steve Wickham, said permits for the project were granted just before the government entered caretaker mode this week.

"We are optimistic that we will complete the project by the third quarter of 2011," he said.

"There is no significant efficiency or cost improvements for Iluka in developing this rail link but we see it as a very positive step for the community in significantly reducing truck movements."

Regional and Rural Development Minister Jacinta Allan, who announced $3.97 million in state government support for the project in March, said upgrades would increase the volume of freight on the regional rail network by about 25 per cent.

"Once the project is complete and commissioned all heavy mineral concentrate from northern Victoria will be transported by rail between Hopetoun and Hamilton," Mr Wickham said.

"There will be an immediate reduction in this truck traffic of approximately 40 trucks per day but heavy mineral concentrate will continue to be trucked by B-doubles from the Douglas mine (near Balmoral) to Hamilton."