PolyMet Mining Corp.'s proposal for a copper-nickel mine in northeastern Minnesota cleared one of its biggest hurdles Tuesday, with the release of a preliminary report that appears to lay a path for the controversial project.

The report, a massive document tallying more than 3,000 pages, says that with proper engineering controls, the open-pit mine would not significantly affect water quality in the region or cumulatively affect endangered or threatened plant and animal species. The mining project would wipe out more than 900 acres of wetlands, the report states, and the company would have to satisfy state and federal regulators with a wetlands mitigation plan.

Tom Landwehr, commissioner of the state Department of Natural Resources (DNR), which authored the draft report, called it "a major step forward."

PolyMet chief executive Jon Cherry said Tuesday's report was a "huge milestone for us."

Plans for a way to tap copper, nickel and other precious metals in an environmentally sensitive area that runs close to the prized Boundary Waters Canoe Area Wilderness (BWCA) have been a decade in the making. Environmentalists have resisted the project at every turn, while others have said the project could spark an economic renaissance in the job-starved Babbit-Hoyt Lakes area north of Duluth.

The review took longer than expected in part because it generated more than 58,000 public comments and took 60 people to address each comment and get them into the report.

"It has been a huge undertaking," Landwehr said. "It took us several months to characterize those comments."

Officials stressed that the new report is a working draft, with the final report expected late this fall. At that point, regulators will open the final report to still more public comment.

The information in the report is strictly informational, Landwehr said, but spells out the potential environmental effects of PolyMet's proposed mining operations — as well as what mitigation efforts would address those concerns.

Chief among those concerns are the project's effects on water quality. PolyMet has proposed a wastewater treatment plant that state regulators said would help mitigate the effect on water quality.

"With the proposed engineering controls, the water quality model predicts that the NorthMet Project Proposed Action would not cause any significant water quality impacts," according to the preliminary report.

Regulators also said "there would be few cumulative effects … after proposed mitigation and adaptive management measures are applied."

Even after a final environmental impact statement is issued, PolyMet must apply for 24 permits to nine agencies in order to proceed with its open pit mine and processing facility.

"Each of those individual permits will still be a hurdle," Landwehr said. "There's no guarantee they will be granted."

Approval of any permits would also depend on whether PolyMet can provide sufficient financial assurances to state and federal regulators for any future cleanup should the mine be required to close.

Nevertheless, the draft review, said Polymet's Cherry, "shows that the project can be done in a way that's safe and protective of the environment."

Conservation watchdog groups and Minnesota Indian tribes have raised alarms about the project's potential effects on the delicate ecosystem that stretches up to the BWCA. Aaron Klemz, spokesman for the Friends of the Boundary Waters Wilderness, said the group would comment on the report later this week.

PolyMet projects that the copper-nickel mine will create 360 permanent local jobs, and hundreds more indirectly. The company estimates it will produce $80 million annually in federal, state and local taxes.

"Jobs for Minnesotans fully supports the NorthMet project and other projects that are still in the early stages of development, as well as the economic benefits these projects can bring to our state," said Nancy Norr, board chairwoman for Jobs for Minnesotans.

Ricardo Lopez • 651-925-5044