April 15 (Reuters) - North Carolina regulators have

approved a state mining permit for Tesla supplier

Piedmont Lithium ( PLL ) to develop one of the largest U.S.

sources of the key electric vehicle battery metal, Piedmont said

on Monday.

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 ( LAC ) 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.