Brazilian mining giant Vale said Thursday it had agreed to pay $7 billion in damages over the 2019 collapse of a mining waste dam that unleashed a flood of toxic sludge and killed 270 people.

It is the largest ever damages agreement in Latin America, according to the government of Minas Gerais, the southeastern state where the disaster sent millions of tons of iron-ore mining waste gushing over houses and farmland.

Vale, one of the world's biggest mining companies, agreed to compensate victims and their families, fund socioeconomic programs for the hard-hit region around the town where the dam was located, Brumadinho, and also fund projects to repair the blighted environment.

"This agreement seals Vale's commitment to fully compensate for Brumadinho and support the development of Minas Gerais," the company said in a statement.

However, victims hit by the tragedy protested outside the Court of Justice in the state capital, Belo Horizonte, saying the amount of damages should have been far higher.

"This amount doesn't cover the damages to our families, the deaths and especially the destruction of the environment. The winner here is Vale," said Joceli Andrioli of the Dam Victims' Movement (MAB).

"We're going to keep fighting until this crime is punished, and we're going to go to the Supreme Court" to sue for a bigger settlement, he said.

Direct damage payments to victims under the deal will total 9.17 billion reais ($1.7 billion). It leaves open individual victims' rights to seek further damages.

The state government had been seeking a much bigger amount -- 55 billion reais ($10.2 billion) in all, instead of the total of 37.7 billion reais announced in the deal.

The state said the amount, negotiated via mediation, was an initial estimate and that the company could have to pay more.

"The agreement requires Vale to fully repair all environmental damage. The above-mentioned amount... could be increased if necessary," it said in a statement.

The projects funded by Vale will include a massive clean-up of the Paraopeba river and a program to reforest the affected area by cloning the DNA of native plant species in partnership with a local university, the company said.

- Criminal charges still loom -

The January 2019 disaster was one of the worst industrial accidents in Brazilian history. It obliterated a huge swathe of territory around the dam in Brumadinho, a municipality home to around 40,000 people.

The official death toll from the disaster is 259, with 11 people still missing despite a months-long search for their bodies.

For Vale, the disaster was devastating.

The company reported a net loss of $1.68 billion for 2019, calling it "the most challenging year of its history."

Brazilian prosecutors charged 16 people, including Vale's ex-president Fabio Schvartsman, with intentional homicide and environmental crimes, alleging they hid the risk of a dam collapse.

The deal does not cover the criminal charges stemming from the disaster.

Vale shares jumped 3.16 percent Wednesday on the Sao Paulo stock exchange on initial reports that an announcement was imminent.

They added around 1.5 percent Thursday after the deal was announced, before falling back again to around opening level.

It was the second such disaster in recent years involving Vale.

In 2015, another tailings dam failed in the district of Mariana that was owned by a joint venture between Vale and Anglo-Australian miner BHP, killing 19 people and flooding 39 towns.

jm/jhb/st

VALE

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