Brasilia, Mar 3 (IANS): The Brazilian government and mining firm Samarco have signed a billion-dollar agreement providing indemnification for last year's toxic dam spill.

As part of the deal signed on Wednesday, the company commits to pay an initial settlement of 4.4 billion reais ($1 billion) over the next three years, which will be used to clean up the Doce river and pay compensation to families of the victims and local businesses, Xinhua news agency reported.

The spill, considered the worst environmental disaster in Brazil's history, occurred on November 5, 2015, when a dam burst in Minas Gerais state, unleashing a flood of polluted water and arsenic-laced mud into the river.

A village was destoryed, 17 people were killed, while two remain missing, and the spill continues to pose a rsk as the pollution seeps into the Atlantic Ocean.

The agreement was signed by the federal government, the affected states of Minas Gerais and Espirito Santo, and by corporate shareholders of Samarco, and its joint owners Vale and BHP Billiton, which have to guarantee the payments if Samarco fails to do so.

Brazil's President Dilma Rousseff presided over the signing of the agreement. Rousseff said the clean-up effort would begin immediately, and a long-term recovery plan would be put in effect.