BHP’s Samarco joint venture has reached a settlement with the Brazilian government that will see it pay a minimum of $US1.7 billion over six years for a deadly tailings spill.

The incident killed 19 people last year, and now BHP and Vale will set up a foundation for reparations, including efforts to restore the environment, local communities and infrastructure, other remediation and compensation for affected families.

If the agreement passes a review by Brazilian courts, it should settle the lawsuit brought against Samarco by the states of Minas Gerais, Espirito Santo and the Brazilian government, which sought $US5.1 billion worth of damages.

The deal will see $US500 million paid out in 2016, and then $US300 million in 2017 and 2018.

Payments will continue until 2021, but the amounts will be dictated by the remediation and compensation projects required.

The agreement is renewable every year until all obligations have been met.

If Samarco fails to make the payments, liability for them will be extended to the owners, BHP and Vale

BHP CEO Andrew Mackenzie was positive about the deal.

“It provides a platform for the parties to work together to support the remediation of affected areas,” he told reporters on Monday.

“This agreement demonstrates our commitment to repairing the damage caused and to contributing to a lasting improvement in the Rio Doce.”

Resource sector analysts say it is likely that Samarco will be able to self-fund the payments.

“More typically we would expect capex to run at around $100-200 million per annum, although tailings dam remediation may keep that number higher initially,” Shaw and Partners senior analyst Peter O’Connor said.

“Free cash flow (pre-foundation) would likely be at least $300 million per annum and potentially well north of $500m as capital commitments tail off.

“Hence the above foundation contributions should be covered by Samarco, in the first instance without resort to BHP or Vale top-up.”

There is a still a chance of criminal action though, with Brazilian Police launching an investigation into the culpability of seven Samarco officials for deaths caused by the spill.

There have already been accusations of qualified homicide, which carries a penalty of up to 30 years in prison.