SAO PAULO, March 24 (Reuters) - The controlling shareholders of Brazilian steelmaker Usiminas could agree to split the company's assets and go their separate ways over the next year in a last ditch attempt to resolve an ongoing battle for control, a source familiar with the matter told Reuters.

The division would see Japan's Nippon Steel & Sumitomo Metal Corporation take the 4 million-tonne-per-year Ipatinga mill, while Italo-Argentine Techint would keep the Cubatao plant, which also has an annual capacity of 4 million tonnes but has been shut since the start of the year.

"Nippon has already concluded that it's necessary to have a divorce," the source said late on Wednesday on condition of anonymity. "This has to happen within a year, there's no longer a climate of conviviality or trust."

Nippon Steel in Brazil declined to comment. Spokespeople for Techint did not immediately respond to requests for comment.

The two steel companies have been at loggerheads since former Usiminas Chief Executive Officer Julian Eguren was dismissed over allegations of misuse of funds in September 2014. Eguren denies all wrongdoing. Techint demanded his reinstatement, but Nippon Steel refused.

In the midst of a severe slump in Brazil's steel market and a 1.6 billion reais loss ($434 million) in the fourth quarter, the Usiminas board is in the process of negotiating a capital injection from its shareholders in order to enable the company to weather the difficult market conditions.

(Reporting by Alberto Alerigi, writing by Stephen Eisenhammer; Editing by Alistair Bell)