The water tank in the north Western Australian town was damaged during a 2020 cyclone.
A new 20 million litre concrete water tank offers Karratha greater protection against cyclone damage.
It replaces a 39-year-old steel plate tank damaged by Tropical Cyclone Damien that made landfall in the town in February 2020.
Perth-based SRG Global will commence construction of the tank next month, within the existing footprint at the Water Corporation site off Rosemary Road, with practical completion expected late 2021.
The project will aim to use local subcontractors where possible, and has already engaged a local Aboriginal company in early works.
Pilbara MLA Kevin Michel said that the tank will offer greater water security in the region for decades to come.
"Cyclone Damien caused significant damage to property and public infrastructure, so this new water tank has been designed to better withstand the worst of the Pilbara weather,” he said.
Tropical cyclones cause the most extreme rainfall events and generate 25–34% of the total annual rainfall around the Pilbara coast.
Western Australian Water Minister Dave Kelly said that the tank is part of a $265.3 million investment in water infrastructure across the north-west.
"The new tank delivers a permanent solution for the city that will provide greater water security and lower maintenance costs,” he said.