Litigation in the eight-year-old Reserve Mining Co. pollution case has apparently come to an end, with a Minnesota Supreme Court ruling today in favor of the taconite company's choice for a site to dump its crushed rock waste material.

Minnesota, joined by the federal government and other states, has led a long legal battle against Reserve, trying to halt its dumping of the waste material (called tailings) into Lake Superior, saying it was a health hazard because it contains asbestos-like fibers that could cause cancer. A federal appeals court has held the risk is potential if not imminent and the material should be dumped on land.

Taconite tailings are finely ground waste rock, mixed with water, left after the low-grade taconite ore is ground up and formed into iron pellets. The pellets are shipped to steel furnaces and are used in place of the natural iron ore which once was shipped from Minnesota in great quantities.

Resolution of the disposal site issue means that the plant - which employs 3,200 people - at Silver Bay on the shore of Lake Superior will stay open.

While neither Gov. Rudy Perpich nor the state attorney general had immediate comment today, in Silver Bay Reserve President Merlyn G. Woodle said in effect the shutdown threat, long a hot political issue, was resolved. He said: We pledge our cooperation with the state authorities to build and operate a safe and environmentally sound tailing disposal system and look forward to many more years of operation in Minnesota."

Reserve, a wholly owned subsidiary of Armco Steel Corp. and Republic Steel Corp., had continually threatened to quit operations if it couldn't use the particular site it wanted, not far inland from its lakeshore plant.

At the same time, Reserve has been under a U.S. District Court order to stop dumping 67,000 tons a day of tailings into the lake. Indeed, a federal judge set a deadline of midnight, July 7, 1977, for an end to the lake dumping, which is tantamount to a close order if it didn't stop.

While this federal court deadline hung over its head, Reserve Mining was fighting a state court battle with Minnesota officials who wanted the waste dumped 13 miles farther inland from the lakeshore.

The state contended this would be environmentally safer but the company, which has denied the cancer danger, insisted it could not afford to accept the state's choice.

In ordering a five-year permit for the company's preferred location - called "milepost seven" - Minnesota Supreme Court laid down three pages of conditions "to prevent the deposited tailings from reentering the air and water of the state."

The court ordered that when the dumping was over at that place the entire basin "shall be totally vegetated as soon as possible using the then-best-available technology."

The Minnesota Pollution Control Agency and the Minnesota Department of Natural Resources - the two agencies ordered to issue the permits - rejected Milespost Seven last year, on grounds that blowing dust from the dump site might endanger the residents of Silver Bay.

The two agencies also accepted the claim of a hearing examiner that massive dams impounding taconite tailings might someday break, sending the mass cascading back into Lake Superior.

The ruling was cheered in Silver Bay and Babbitt, where about 3,200 jobs in the taconite plant and Reserve's "pernicious use of power' amounted to an economic club that mocked Minnesota environmental laws.

Reserve now dumps about 67,000 tons of tailings per day into Lake Superior. The company plans to haul its tailing by rail and pipeline to the on-land site, which will take at least two years to construct. Cost estimate for the disposal system have been in the range of $300 million.