Brazil's Vale ordered to suspend work on key railway project

* Federal judge orders broader environmental study

* Project intended to increase capacity on Carajas line

* Vale to contest decision

SAO PAULO, Aug 6 (Reuters) - A federal judge in Brazil has ordered iron-ore giant Vale to suspend work on part of a $4.1 billion logistics plan which is considered crucial to the company's goal to increase output at its main production site.

Work on doubling the Carajas railway, which connects the company's single largest iron-ore mine to the Ponta de Madeira seaport in the state of Maranhao, was halted after local human rights groups pointed to procedural shortcomings in the environmental licensing process.

Vale is contesting the decision, which requires the company to conduct a broader environmental impact survey, according to a Vale press representative.

Vale was forced to temporarily suspend traffic on the Carajas railway in March due to the collapse of a structure, highlighting the risks of supply disruptions such as mudslides, flooding, derailments and port strikes for key raw materials that come from increasingly hard-to-reach areas.

By expanding the line, Vale aims to increase the railway's capacity to 230 million tonnes per year from the current 130 million tonnes.

Vale said in its most recent earnings report that it planned to invest $1 billion in its logistics project this year. (Reporting by Asher Levine and Sabrina Lorenzi)