The approval from the North Carolina Department of Environmental Quality, which is conditional on the company posting a $1 million reclamation bond, removes a major hurdle to Piedmont's plans to tap a large lithium deposit just outside Charlotte.

Shares in the company, which first applied for the permit in August 2021, rose 20% in premarket trading.

The go-ahead for the 500-foot-deep mine comes despite widespread opposition from neighbors worried about water, noise pollution and other potential problems.

The years-long opposition to the project, which would become one of the few lithium-producing sites in the U.S, illustrates broader tension in the country, as resistance to living near a mine clashes with the potential of EVs to mitigate climate change.

Piedmont must still obtain local regulatory approval and financing. It has applied for U.S. Department of Energy loans via a program through which rivals ioneer and Lithium Americas have already obtained financing.

"We plan to develop Carolina Lithium as one of the lowest-cost, most sustainable lithium hydroxide operations in the world," said Piedmont CEO Keith Phillips.

Piedmont agreed to a deal with Tesla last year to supply spodumene concentrate, a key raw material for making batteries, to the auto giant through 2025, with an option to renew it for another three years.

CHANGES TO DESIGN

The state review process involved the submission of thousands of pages of documents, multiple requests for additional information, and at least three deadline extensions for Piedmont.

State officials are also requiring the company to conduct regular water quality and water table levels tests, and to line a waste storage pit with a synthetic liner, a departure from the typical requirement for an earthen liner.

The state officials had expressed "many concerns" about Piedmont's plans to discharge chemicals into the public sewer system, according to the filings

Piedmont, which also is working on lithium projects in Tennessee, Ghana and Quebec, must still obtain state air quality and wastewater permits, both of which are routine for mining projects in the state.

Importantly though, Piedmont must also receive a zoning variance from officials in Gaston County, where the project has been opposed by some county commissioners.

"We look forward to continued engagement with the local community and the Gaston County Board of Commissioners," said Phillips.

Despite spending years buying acreage, hiring investment bankers and inking a supply deal with Tesla, Piedmont did not approach county commissioners until July 2021 with its plans.

The company also did not apply for a state mining permit until the following month. Those strategic missteps have fueled mistrust across the county of roughly 220,000.

Piedmont may also face challenges with financing amid low lithium prices, analysts said.

"Finding external capital for a new lithium project could prove difficult at current lithium prices, though it will help that Carolina Lithium is very low on the cost curve," said brokerage TD Cowen on Monday.

Meanwhile Albemarle, the world's biggest lithium miner, is hiring staff and buying land in a neighboring North Carolina county amid plans to re-open a mothballed spodumene lithium mine that would compete directly with Piedmont.

(Reporting by Ernest Scheyder; additional reporting by Sourasis Bose in Bengaluru; Editing by Anil D'Silva, Tasim Zahid and Jan Harvey)

By Ernest Scheyder