Brazil's gov't, mining company reach billion-dollar settlement on dam disaster

Brazil's government and mining firm Samarco on Wednesday signed a billion-dollar agreement providing indemnification for last year's toxic dam spill.

As part of the deal, the company commits to paying an initial settlement of of 4.4 billion reais (1.12 billion U.S. dollars) over the next three years, which will be used to clean up the River Doce and make reparations to families of the victims and local businesses.

The spill, considered the worst environmental disaster in Brazil's history, occurred on Nov. 5 last year, when a tailings dam burst in Minas Gerais state, unleashing a flood of polluted water and arsenic-laced mud into the River Doce, a major river in the country.

A village was destoryed, 17 people were killed, while two remain missing, and the spill continues to pose a risk as the pollution seeps into the Atlantic Ocean.

The agreement was signed by the federal government, the affected states of Minas Gerais and Espirito Santo, and by corporate shareholders of Samarco, and its joint owners Vale and BHP Billiton, which have to guarantee the payments if Samarco fails to do so.

Brazil's President Dilma Rousseff presided over the signing of the agreement. Rousseff said the clean-up effort would begin immediately, and a long-term recovery plan would be put in effect.

The amount is to be administered by a body designated by the mining company.

The full settlement amounts to some 20 billion reais (5.1 billion dollars), according to a civil suit filed against the firm by the public prosecutor's office, though most observers expect an out of court settlement to be reached. Endi