Strong iron ore prices are luring junior miners to bring more production into the market, with several small Australian operators seeking approval to restart shuttered mines or expand existing ones.

Despite expectations that iron ore prices would spend much of 2016 below $US40 per tonne, the bulk commodity averaged $US58.32 per tonne during the year, meaning most Australian miners were able to make a profit.

The price has been above $US77 per tonne in recent days, giving companies such as Mt Gibson Iron the confidence to pursue a restart of its Koolan Island operations.

Production from Koolan Island's main pit was interrupted in November 2014 when a wall collapsed and allowed seawater to flood the pit.

Mt Gibson has since mined ore from satellite deposits on Koolan Island, but in lower volumes than it was prior to 2014.

The company has been studying ways to rebuild the seawall beside the main pit, and Mt Gibson has in recent days sought federal government approval to go ahead with the works.

In documents submitted to the federal environment department on January 3, Mt Gibson said it planned to build a new 250-metre wide, 15-metre high wall across the failed section of the old seawall.

The mine, which is one of the few iron ore operations to ever be inspected by the Queen and the Duke of Edinburgh, is hoped to be built by the end of 2017.

Mt Gibson would then spend six months pumping out the 21 billion litres of sea water sitting in the main pit, enabling production of iron ore to resume in the September quarter of 2018.

The main pit at Koolan Island produces very high grade iron ore, which typically attracts a premium to the benchmark iron ore price.

Submission of the documents to the federal government may help to explain why Mt Gibson shares were trading 2.8 per cent higher on Thursday.

Mt Gibson's hopes for Koolan Island came as Mineral Resources and BC Iron announced they had won approval to mine below the water table at their Iron Valley mine in the Pilbara.

BC Iron told the ASX that the approval would "significantly" extend the life of the mine. Documents submitted to the WA Environment Protection Authority suggest the approvals could add 10 years of mine life at Iron Valley which produces between 6 million and 7 million tonnes of iron ore per year.

US miner Cliffs Natural Resources has also won approval to expand its Western Australian iron ore operations in recent weeks, and the expansion could ensure the company is mining in Australia longer than previously planned.

Cliffs sought permission to mine 9 million tonnes of iron ore per year from the "Range F" deposit which is part of its cluster of mines at Koolyanobbing.

The WA Environment Protection Authority gave conditional approval to the project in September and WA environment minister Albert Jacob dismissed appeals by environmentalists in late December.

Minister Jacob will now discuss the approval with other ministers before it is officially given the green light, but the process has cleared its most significant hurdles.

Range F is expected to have a three-year mine life, which means Cliffs is likely to be working in Australia until at least early 2020.

Cliffs' outspoken chief executive Lourenco Goncalves indicated in 2015 that the company's Australian iron ore mines would be exhausted by the end of 2018.

At the time, Mr Goncalves said selling iron ore to China was a "doomed, horrible" business to be in, and he said he "couldn't wait" to exit the company's Australian iron ore assets.

But the Range F approval suggests Cliffs might be hanging around longer than Mr Goncalves had indicated.

In recent commentary, Mr Goncalves said he believed the change of leadership at Rio Tinto during 2016 had played a role in the recent strength in iron ore prices, and he believes big miners like Rio and BHP are no longer expanding iron ore production as quickly as they were a few years ago.

While the restart and extension approvals sought by Mt Gibson, BC Iron and Cliffs may take a while to impact the market, new supply is expected to hit the market in coming months from Vale's new S11D project.

Meanwhile, Atlas Iron announced on Thursday that it had repaid $54 million worth of debt, after its cash holdings swelled by $39 million during the December quarter.

The company said it hopes to be in a "net cash position" by the middle of 2017.

Atlas shares were fetching 1¢ in late October but have since risen to 2.7¢.