The project, which could reduce the dependence of 90% of Brazilian agriculture on imported potash, has been paralyzed for years due to opposition from the Mura indigenous people, who claim to have not been consulted about the use of their ancestral lands.

The Brazilian state of Amazonas granted a license to Canadian company Brazil Potash Corp to build Latin America's largest fertilizer mine in the Amazon rainforest, but federal prosecutors said Tuesday it was not legally acceptable.

Governor Wilson Lima announced on Monday that the license was issued by his state's environmental protection agency, IPAAM, and that the company plans to invest 13 billion reais (US$2.6 billion) to build the mine in Autazes, 75 miles (120 km) southeast of Manaus, the state capital.

The project, which could reduce the dependence of 90% of Brazilian agriculture on imported potash, has been paralyzed for years due to opposition from the Mura indigenous people, who claim to have not been consulted about the use of their ancestral lands.

Federal authorities say the license must come from the federal environmental protection agency, IBAMA, and not the state's agency, whose government backs the project as it says will generate investments and thousands of jobs.

The federal prosecutor's office in Manaus said in a statement that it considers that the license granted by the IPAAM "is irregular and will adopt the appropriate measures."

"The license violates constitutional rights, international standards and also the rights of indigenous peoples," he stated.

In September, a federal judge in Manaus reiterated her 2016 decision to suspend the project until the Muras are properly consulted. It also ruled that the license should come from the federal environmental agency and not the state agency.

A federal appeals court later overturned a court order suspending Potash Corp's state license, arguing that IPAAM could issue the permit because there is no officially recognized Indian territory in the planned mine area.

Mura leaders claim the mine overlaps their ancestral lands and want it to be recognized as protected reserve lands. But the demarcation process is pending with the indigenous affairs agency, Funai, and divisions have emerged within the Mura community.

Potash Corp maintains that Mura leaders support the mine.

But five Mura communities and the Amazonas Indigenous Association sent prosecutors letters seen by Reuters rejecting the governor's announcement.

Brasil Potash is owned by CD Capital, with a 34% stake, Sentient, with 23% of the shares, and Stan Bharti's Forbes & Manhattan Group, a Toronto-based merchant bank that started the project, which now owns the 14%, along with other shareholders.