Brazilian miner Vale has agreed to pay BRL37.7bn ($7bn) in compensation for the Brumadinho dam disaster that killed 270 people and caused significant environmental damage.

The company signed the compensation agreement with prosecutors and the Government of the Brazilian state of Minas Gerais, where the incident occurred.

According to a Reuters report, around BRL5.5bn ($1bn) will be paid from a judicial escrow account that held Vale funds during the course of legal proceedings. The remaining amount will be paid by the company in instalments over six years.

The settlement does not interfere with any criminal cases against Vale personnel and other civil suits related to the environmental damage.

The disaster occurred on 25 January 2019 when a dam collapsed at Vale’s Córrego do Feijão iron mine. The incident released a mudslide on the local town of Brumadinho inundating mining offices, houses and farms. Several Vale employees also lost their lives in the incident.

In a statement, Vale CEO Eduardo Bartolomeo said: “Vale is committed to fully repair and compensate the damage caused by the tragedy in Brumadinho and to increasingly contribute to the improvement and development of the communities in which we operate.”

Minas Gerais Governor Romeu Zema said that the proceeds will be used to rebuild the local economy and environment, reported The Guardian.

Vale ended 2020 with 322 million tonnes of annual iron ore production capacity. This year, it aims to increase the figure to 350Mt.