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The failure of the dam, which is owned by Samarco, a joint venture between Vale and BHP Billiton, caused 19 deaths, at least 16 injuries as well as significant environmental damage.
The preliminary agreement outlines the process and timeline for settling the civil lawsuit brought by Brazilian prosecutors against BHP, Vale and Samarco in May 2016.
Under the agreement, it is expected that final settlement between the parties will be reached by 30 June 2017.
BHP says that the preliminary agreement requires BHP, Vale and Samarco to provide an initial security of $US675 million within 90 days to support the social and environmental remediation programs of the affected areas.
BHP, Vale and Samarco are also required to advance $US60 million to support environmental programs in the Brazilian municipalities of Barra Longa, Rio Doce, Santa Cruz do Escalvado and Ponte Nova.
Operations at the Samarco mine remains suspended since the disaster occurred and BHP says that any recommencement of operations is subject to numerous approvals and contingencies.
"Any restart of operations at Samarco is subject to a separate set of negotiations with relevant parties and will occur only if it is safe, economically viable and has the support of the community," the mining powerhouse says in a statement to the ASX.
"Resuming operations would require government approvals, the granting of licenses by state authorities, the restructure of Samarco's debt, and the completion of commercial arrangements with Vale regarding the use of its infrastructure."
BHP shares closed 17 cents higher yesterday at $26.69 but has fallen slightly this morning. As at 1.30 pm AEST, the share price is $26.36.
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