Shares of PolyMet Mining (PLM -0.48%) rallied as much as 12.3% by 10:30 a.m. EST on Wednesday. Driving up the mining stock was news that a federal court threw out a challenge to its water quality permit.
In September 2019, the Fond du Lac Band of Lake Superior Chippewa filed a challenge in a U.S. district court arguing that the Environmental Protection Agency (EPA) should have objected to PolyMet Mining's water permit. However, a judge ruled that the Band should have opposed this claim before the EPA issued the permit. As a result, the judge dismissed the claim, ending the only federal challenge to PolyMet's water quality permit.
However, the company is continuing to litigate the permit in the Minnesota Court of Appeals. It aims to defend a favorable ruling by the Ramsey County District Court last fall. Moreover, the federal court's decision will allow the band to proceed with claims that the EPA should have notified it about the potential for PolyMet's project to impact its reservation, which is 70 miles downstream.
PolyMet is working to develop the NorthMet project, which has significant copper, nickel, palladium, cobalt, platinum, and gold reserves. If it eventually builds this mine, it will become one of the leading U.S. producers of nickel, palladium, and cobalt. However, it will take an estimated $945 million investment and 24 to 30 months of construction to get this project off the ground, which is no guarantee given its continued legal battles. That makes PolyMet a very high-risk mining stock.