BHP Billiton's Samarco joint venture will pay up to $US2.3 billion ($A3.15 billion) over six years after reaching a settlement with Brazilian authorities over a deadly dam spill in November.
Samarco, jointly owned by BHP and Brazil's Vale, will set up a fund for restoration work and to provide compensation for damages caused by the tailings dam spill, as part of a 15-year agreement.
The dam collapse at the Samarco mine in Brazil's Minas Gerais state caused a massive spill of waste material, polluting a major river and killing at least 17 people, besides leaving hundreds homeless in what has been called the country's worst environmental disaster.
Samarco will pay 4.4 billion reais ($1.55 billion) into the fund over three years through 2018, with smaller annual payments between 800 million reais ($282 million), and 1.6 billion reais ($550 million) in each of the next three years.
The two mining giants did not outline payments for the following nine years, but Brazilian government authorities on Wednesday said that total payments would add up to an estimated 20 billion reais ($5.1 billion) over the 15-year period, Reuters reported.
"This agreement is an important step forward in supporting the long-term recovery of the communities and environment affected by the Samarco dam failure," BHP chief executive Andrew Mackenzie said in a statement.
The agreement will settle the civil public claim made in November by Brazilian authorities against Samarco, Vale and BHP, under which they had sought up to 20 billion reais for clean-up costs and damages.
The payments are to be self-funded by Samarco, but Vale and BHP would be responsible for covering the costs if Samarco is unable to pay.
"The settlement provides the market with a degree of certainty regarding the financial impact. The amount also seems less than what was first expected," IG's chief market strategist Chris Weston said.
BHP shares, which have lost a third of their value over the past six months, jumped as much as six per cent after the announcement. The stock closed 52 cents, or 3.11 per cent, higher, at $17.25.
Analysts have previously estimated the accident may cost the miner up to $US3.5 billion in fines and damages.
"Financially, the outcome looks satisfactory. We estimate that a restarted Samarco could more than self-fund the foundation contributions," Shaw and Partners analyst Peter O'Connor said in a note on Thursday.
In February, BHP outlined a $US1.12 billion provision in its half year accounts related to the Samarco disaster.
The amount included writing down the value of its Samarco business to zero, and part provision for costs related to the disaster.
Global charity Oxfam, which had called for swifter action after the disaster, said it welcomed the agreement.
"We are pleased that the Australian mining giant has taken responsibility for the disaster that destroyed homes, livelihoods, businesses and took the lives of 19 people in Minas Gerais state," Oxfam Australia chief executive Helen Szoke said.
