Multinational petrochemical company Perdaman is building a $6 billion facility to produce urea about 20 kilometres northwest of Karratha.
It's the first industrial construction in more than a decade on the rock art-rich peninsula that was formally nominated for UNESCO's world heritage list in February.
"This important project represents a significant investment in the Pilbara and WA, underlining the region's role as the engine room of Australia's economy," Premier Mark McGowan said on Wednesday.
"It is estimated the project will create thousands of jobs within the state and generate a total revenue of $77 billion over its life."
The plant will convert natural gas from Woodside's Scarborough Gas Project into an estimated 2.3 million tonnes of urea for domestic sale and export per year.
Resources and Northern Australia Minister Madeleine King said the project would produce fertiliser for Australian farmers and support food security in the region.
"Ultimately it will help feed a great many people," she said.
Murujuga traditional owners said the announcement would lead to the removal of Indigenous rock art from the site despite cultural heritage assessments not being completed.
"I am so angry and hurt right now. It is a sad, sad state of affairs," Josie Alec said.
"The free, prior and informed consent has still not been given to Perdaman to remove these rocks - not all traditional custodians have been consulted on this."
Greens Senator Dorinda Cox said it was hypocritical to nominate Murujuga for world heritage listing and allow industry to "destroy" it.
"It's disappointing," she said.
Murujuga is among the world's most significant rock art sites with up to two million petroglyphs.
It contains evidence of continuous traditional culture over at least 50,000 years.
Traditional custodians have campaigned against industrialisation which threatens the preservation of the petroglyphs.
Environment Minister Tanya Plibersek has previously said a proposed world heritage boundary of almost 100,000 hectares of land and sea has been negotiated.