Argentina's Mendoza Province has lifted its suspension of the multibillion dollar Rio Colorado potash mine project being developed by Brazilian mining company Vale SA.

Mendoza's Environmental Secretariat has allowed Vale to move forward with the mine after the company agreed to submit reports on its local hiring and procurement practices to the local authorities, the provincial government said in a statement.

Under the terms of its agreement with the province, Vale must give local suppliers preferential treatment and hire no less than 75 percent of its work force locally.

Vale confirmed it had received a communication from the Mendoza state government, giving it the go-ahead to resume work on the project. Vale declined to comment on any possible changes to the project's timetable as a result of the stoppage and the terms of the new accord.

Mendoza ordered Vale to halt development of the massive fertilizer mine on June 17 after accusing the company of failing to stick to an investment timeline as well as hiring and sourcing obligations.

Vale's project is still at the equipment-procurement phase and isn't expected to start production until 2014. The company is eyeing soaring demand for potash-based fertilizers in the south of Brazil, where soybean cultivation has expanded sharply in recent years.

Vale is expected to invest around $5.9 billion on development of the potash mine it bought from Rio Tinto PLC in 2009, with $1.2 billion slated for this year alone. Heated water will be pumped deep under the surface of the site in the remote southern tip of Mendoza province to bring the potash to the surface.

The project also calls for construction of a railroad to carry the potash to a port on the Atlantic Ocean and an electric power plant at the Rio Colorado site.

Vale said late last year it expects to start producing potash at a rate of 2.4 million metric tons a year at Rio Colorado during its first year of production, rising to 4.3 million tons a year in a second phase.

New York-traded shares of Vale were recently down 1 percent at $33.08 Tuesday afternoon.