* One source sees deal signing in first quarter of 2019
* Brazil's CSN working to cut debt pile
* Iron ore prices rise after Brazil mining dam failure (Updates Jan. 31 story with deal amount in paragraph 2)
By Julia Payne and Maytaal Angel
LONDON, Feb 1 (Reuters) - Global trader Glencore is close to finalising a deal to make a $500 million payment to the mining arm of Brazil's Companhia Siderurgica Nacional (CSN) for iron ore cargoes to be delivered over five years, sources familiar with the matter said.
One source said Glencore, which would receive 20 million tonnes of iron ore over the period, would sign the deal no later than the first quarter.
The Brazilian steelmaker is aiming to reduce debts that piled up after an iron ore and steel price rout in 2015-2016 and a severe recession in Brazil, prompting investors to demand asset sales.
Glencore, which sources said would secure backing from banks for the deal, and CSN declined to comment.
The deal with Glencore comes against a backdrop of rising iron ore prices, after the collapse of a tailings dam run by Brazilian mining giant Vale that forced the firm to announce plans to cut 10 percent of its output.
Benchmark iron ore prices SH-CCN-IRNOR62 were trading at $85.3 a tonne on Thursday, after plunging as low as $38.50 tonne at the end of 2015.
To cut debts, CSN sold its U.S. unit for $400 million last year and Chief Executive Benjamin Steinbruch promised to sell assets worth an additional $1 billion, although none of those sales have yet materialised.
A court ruled in August against allowing the firm to pay dividends.
CSN's net debt was equivalent to 5.8 times annual earnings before interest, tax, depreciation and amortization (EBITDA) in the first quarter of 2018.
Steinbruch had said in May he aimed to cut it to three times by the end of 2018. But analysts at Brazilian bank Itau BBA, a unit of Itau Unibanco, put the ratio at 4.8 times at the end of 2018 and said they expected it to drop to just 4.3 times by the end of 2019, if there were no asset sales.
Itau BBA said in a January note that CSN's divestments in the short term were likely to include the sale of Stahlwerk Thuringen (SWT) and Lusosider, expected to raise $754 million in total, and iron ore streaming activities, expected to raise $538 million.
SWT is a producer of long steels in Germany and Lusosider is a Portuguese steel sheet producer.
Itau BBA said an asset sales programme of $1 billion or more could propel CSN into a "virtuous cycle", giving it access to cheaper debt and making more funding available to invest in its mining and steel assets.
CSN Mining is Brazil's second largest iron ore exporter and produced nearly 30 million tonnes of the raw material for steel in 2017.
Vale is the world's largest iron ore miner and is Brazil's biggest exporter.
$1 = 3.7151 reais Reporting By Julia Payne and Maytaal Angel Additional reporting by Alberto Alerigi Jr in Sao Paulo Editing by Edmund Blair and David Evans