Brazil prosecutor threatens to torpedo $5bn dam burst settlement

A nearly $5 billion expected settlement for last year's toxic flood that killed 17 people in Brazil could be challenged by prosecutors, who say the amount is not enough.

The government has signaled that Samarco, co-owned by giants Vale and BHP Billiton, is ready to pay 20 billion reais for the collapse of a waste water dam at its iron ore mine in Minas Gerais on November 5.

The accident, which unleashed a massive flood of mud into the River Doce, was described as Brazil's worst ever environmental disaster. Drinking water supplies were cut for hundreds of thousands of people, a village was flattened, and local fishing and tourist businesses were badly impacted.

Amid expectations that the government is seeking a resolution with the mining giants, federal prosecutor Jose Adercio Leite Sampaio said he would appeal what he said was an overly hasty deal.

"How can you define an amount if there are no criteria for evaluating the damage?" he told AFP. "Where did they get this number? For us it's a magic number.... It could be 23 or 24, 30, 40 billion."

"We will appeal this agreement. We will have no other option than to take action, including against the state... which is responsible for not adequately overseeing Samarco," said the prosecutor, who is from Minas Gerais state.

Sampaio said he was also concerned with plans for administering the proposed compensation fund, which he said had been politicized and had "absolutely minimal" input from civil society.