Alcoa was handed a $55 million penalty on Wednesday for illegal clearing of WA's jarrah forests, south of Perth, between 2019 and 2025.
At the same time, federal Environment Minister Murray Watt revealed Alcoa had been granted an 18-month national interest exemption, allowing for "limited land clearing to continue".
The exemption allows for a "strategic assessment" to be completed, with a view to Alcoa maintaining its operations at the Huntly and Willowdale mines until 2045.
The End Forest Mining Alliance, which includes the Conservation Council of WA, the WA Forest Alliance and the Wilderness Society, on Saturday slammed the move.
"The federal government has prioritised corporate interests and foreign defence interests above the killing of our forests, the future of the endangered species which rely on them, and the potential contamination of Perth's drinking water dams," Â conservation council director Matt Roberts said.
"This government is advancing critical minerals mining for defence purposes and pandering to the interests of our trading partners and sidelining nature in the process."
In a statement on Wednesday, Minister Watt said the agreement with Alcoa enabled the government to assess the ongoing environmental impacts of its operations while continuing to offer it operational certainty.
Alcoa said it would limit clearing to 800 hectares per year and increase new rehabilitation rates annually to 1000 hectares per year by 2027.
"We are committed to responsible operations and welcome this important step in transitioning our approvals to a contemporary assessment process that provides increased certainty for our operations and our people into the future," Alcoa president and chief executive William F Oplinger said.
WA's jarrah woodlands are home to many endangered species, including Carnaby's and Baudin's black cockatoos.
