Brazilian iron ore miner Vale has resumed operations of its Agua Limpa iron mine, which was closed early this year because of a reduction in demand.

The mine will generate 5.4 million tonnes by the end of 2009, a 17% increase over the 4.6 million tonnes annual rate that it was producing in December when it first started downsizing operations, Reuters reports.

The move comes on the results of a recent surge in spot iron ore prices on the back of increasing demand in China.

Rising tension between Canberra and Beijing over the detention of executives from Rio Tinto have benefited the company, Reuters reports.

A Vale executive told Reuters that the miner prefers to keep the benchmark system even though some are pushing for the increased use of the spot market.