The government overruled an environmental court that in July refused permission for the company, owned by giant HeidelbergCement, to continue mining limestone, a key ingredient of cement, at its quarry in Slite beyond Oct. 31.
"The looming cement crisis is averted and we can avoid serious societal consequences for housing construction, infrastructure and industry," Infrastructure Minister Ibrahim Baylan told a news conference.
A government report warned that 150,000 jobs could be at risk if the construction sector grinds to a halt, while importing cement could lead to increased CO2 emissions.
Construction accounts for roughly 11% of GDP, according to Sweden's Construction Federation.
(Reporting by Johan Ahlander; Editing by Kirsten Donovan)