What happened

Shares of PolyMet Mining (NYSEMKT:PLM) were down 20% Tuesday morning before recovering somewhat; as of 11 a.m. EDT, they remained down 18%. This follows a huge day on Friday, when shares were up 70% before closing ahead 40%.

So what

PolyMet is preparing to begin the NorthMet mining project in Minnesota. The area includes the Mesabi Iron Range, which has been supplying iron ore to the nation's steelmakers for more than a century.

Heavy trucks in an open pit mine

Image source: Getty Images.

Copper was discovered in the iron range in the 1940s, and advancements in processing technologies now allow for the extraction of copper, nickel, gold, silver, and other metals from the site. PolyMet is aiming to become the first Minnesota mining company to commercially produce these metals. 

Now what

Last week, PolyMet received a favorable ruling from a Minnesota district court regarding challenges to the water permit it received for the project. The judge found that processing of the permit by the Minnesota Pollution Control Agency (MPCA) did not include any procedural irregularities. Several environmental groups have challenged the National Pollutant Discharge Elimination System (NPDES) permit for the NorthMet project. 

The groups claimed that the MPCA suppressed Environmental Protection Agency (EPA) comments, in an effort to keep evidence out of the administrative record. The judge denied these allegations and said that more interaction between the EPA and MPCA occurred than usual for the NPDES permit. 

PolyMet's shares reacted with the big jump on Friday. Today's drop is a dose of reality that the fight over the permit isn't over. The district court ruling will be included in a broader challenge to the permit that will be held by the court of appeals. Shares are likely to remain volatile as the case makes its way through the litigation process.

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