Global miner Anglo American is considering selling its majority stake in the Amapa iron ore operation in northern Brazil as it focuses on its flagship Minas-Rio growth project further south, several industry sources said on Monday.

Anglo bought control of the Amapa operation in 2008, as part of the $5.5 billion (3.5 billion pounds) Minas-Rio acquisition deal with Brazilian billionaire Eike Batista's MMX.

An internal valuation has put the Amapa operation's value at up to $1.5 billion, meaning Anglo's 70 percent holding would be worth at least $1 billion, according to one of the industry sources with direct knowledge of the matter.

It is a small mine, it is not the best asset in the world. It is in the Amazon and the logistics are difficult ... They would rather focus on Minas-Rio, a second industry source said.

Another source familiar with the situation said the mine was not scaleable and pointed to restrictions on capesize vessels in the Amazon port serving Amapa, limiting the amount of ore that can be shipped at any one time and increasing freight costs.

Amapa can ship ore even without capesize vessels, but the giant dry bulk carriers allow ore to be transported from Brazil to China -- the world's top commodities consumer -- at much improved margins.

The source also said Amapa's location in the far north of Brazil meant it was even remote from Brazil's domestic consumers of iron ore, the country's large steel mills further south.

The third-largest UK-listed diversified miner, Anglo has been looking to rationalise its portfolio in recent years, and analysts said a potential sale of Amapa fitted that strategy.

Anglo American declined to comment on Monday.

STRATEGIC BUYERS

Commercial production began in January 2010 and Amapa is expected to produce 4.5 million tonnes in 2011, according to Anglo American's annual report -- a fraction of Minas Rio's expected production of 26.5 million tonnes per year. Amapa became profitable at the end of 2010, ahead of schedule.

It doesn't fit particularly well and it is never going to be a tier-one asset, a third source said, but added the mine was turning a profit and its size makes its acquisition manageable for strategic buyers even in the current climate.

The first source said there had already been interest from an unnamed Brazilian party and from an Indian iron ore producer, which the source was also unable to name.

Anglo's minority partner in Amapa, which produces both pellet and sinter feed, is U.S. miner Cliffs Natural Resources , which the same source said could also be a buyer.

Minas-Rio, bought in 2008 before the financial crisis, has been one of Anglo's more controversial acquisitions. Anglo has been accused of overpaying and the Minas-Rio project, which will include open pit mines and a processing plant producing pellet feed, has seen cost overruns and delays.

It is currently scheduled to come into full production in the second half of 2013.

Earlier this month Anglo American replaced the head of its Brazilian iron ore operations, which includes both Amapa and Minas Rio.

(Reporting by Silvia Antonioli and Clara Ferreira-Marques; Editing by Greg Mahlich)