The permit, which was granted on 4 July, is an important step for Tiomin which can now start talks for a lease to begin titanium mining, the company said in a statement.
If the lease is granted, the $120m (£77.6m) project will be the largest mining venture in Kenya since independence from Britain in 1963.
Despite the environment permit, opposition to the mine, which would be located in Kwale, 65 kilometres (41 miles) south west of Mombasa, remains intense.
About 450 families - or nearly 5,000 people - will have to abandon their homes and fields on 6,000 acres (2,400 hectares) of land to make room for the strip mine and a processing plant.
Local tribes people are concerned about the desecration of the graves of their ancestors and the Digo tribe about the fate of their sacred forests.
Titanium struggle
Although the company plans to return the land to its owners after 21 years, some of Kenya's best farmland might no longer support arable crops because changes in soil structure.
Kenyan scientists are also concerned about sulphur dioxide emissions from the mining plants, the release of radioactive elements, and the impact on the groundwater.
In March, Kenya's High Court dismissed a lawsuit against Tiomin developing the mine and lifted an injunction preventing fieldwork.
Tiomin's mining concession covers four titanium deposits, or about 10% of the world's known reserves.
The company said the deposits would yield 5.6 million metric tons of titanium to be sold to paint manufacturers as a whitener for paint.
The use of a ship loading facility has also been approved.
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