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Brazil Expects Settlement Soon in Samarco Dam Failure

FILE - A helicopter flies over the Bento Rodrigues district, covered with mud after a dam owned by Vale SA and BHP Billiton Ltd. burst in Mariana, Brazil, Nov. 6, 2015.

The Brazilian government expects to reach agreement by Friday with Samarco Mineração SA to settle a 20 billion-real ($4.9 billion) lawsuit for damages in a deadly dam disaster, a spokesman for Brazil's attorney general said Wednesday.

Brazil sued Samarco, a 50-50 iron ore joint venture between Brazil's Vale SA and Australia's BHP Billiton Ltd., after an iron ore tailings dam at its mine in Brazil's Minas Gerais state burst in November.

"The terms of the agreement should be reached by Friday, and the agreement signed in the presence of President Dilma Rousseff and the state governor next week, and certainly before the end of the month," the attorney general's spokesman said.

Marilene Ramos, head of Brazil's environmental protection agency IBAMA, confirmed that the formal signing of the accord would happen this month.

The dam failure sent a tsunami of mud and waste roaring out of the mine, killing at least 17 people. The wave of mine waste flooded hundreds of kilometers of river valleys in two states and eventually reached the Atlantic Ocean. The government considers the tragedy Brazil's biggest environmental disaster.

Samarco has been shut down since the November 5 accident, and the accord is seen as the first step in ensuring the public that damage will be repaired or paid for and that the company will make sufficient changes to allow it to resume mining and put laid-off employees back to work.

Foundation to manage recovery

The deal with Samarco, which will have the financial guarantee of Vale and BHP, will create a foundation to manage recovery, restoration and compensation funds and manage the long-term repair of environmental damage and manage, Ramos said.

Ramos added, though, that Samarco's initial efforts to write a long-term environmental recovery plan, which IBAMA rejected on January 28, would have to improve.

"We're still waiting for immediate measures, with a bigger and more effective scope, to fight the sediments that are in the rivers and reduce the intense cloudiness of the rivers," she said. Ramos said she expected some of these details from Samarco next week.