Brazil's Vale returning iron mine to ArcerlorMittal

* ArcelorMittal rented Mina do Andrade to Vale in 2004

* Total output of 1.4 million tonnes per year

RIO DE JANEIRO, March 2 (Reuters) - The Brazilian division of steelmaker ArcelorMittal is resuming operations of an iron mine rented to mining giant Vale in 2004, ArcelorMittal said Tuesday, as soaring iron ore prices make the business increasingly attractive.

Vale, the world's largest iron ore producer, paid $10 million and made all royalty mineral payments as of 2008 to rent the 1.4 million tonne-per-year mine from Belgo Mineira, a company that later became part of ArcelorMittal (MT.N).

ArcelorMittal Brasil has since November been slowly resuming control of the mine in the state of Minas Gerais.

"The agreement between the company was done in a friendly fashion and did not involve any monetary exchange," said ArcelorMittal in a statement.

Vale (VALE.N)(VALE5.SA) in 2004, during a slump in iron prices, took over operations of the mine and expected to run it for the remainder of its useful life, using the production to supply local steel mills.

Iron ore prices on the spot market have soared to near $130 per tonne in recent months on the back of solid Chinese demand and a recovery in global commodities markets, with analysts predicting strong prices in the medium term.

Brazilian steelmaker CSN (CSNA3.SA) is considering holding an initial public offering for its iron ore division, which it expects will boost production to 37 million tonnes this year. (Reporting by Denise Luna, writing by Brian Ellsworth; Editing by John Picinich)