BHP, Vale shares surge on Samarco deal

A deal on a compensation package for the deadly Samarco tailings dam spill  was reached on Wednesday with Brazilian authorities and the mine owners agreeing to pay an estimated 24 billion reais or $6.2 billion spread out over several years.

Samarco committed to providing $1.1 billion through 2018 into a fund for clean up costs and amounts between $200 million and $400 to 2021.

According to a Reuters report joint owners Vale SA and BHP Billiton will pick up the tab should Samarco be unable to make payments. The mine which has annual capacity of roughly 30 million tonnes has been closed since the November 5 disaster that killed 19 people and left hundreds homeless.

American Depository Receipts of BHP Billiton (NYSE:BHP) trading in New York built on 8.1% gains during regular dealings in after hours trading on Wednesday, while Vale (NYSE:VALE.P) ADRs shot up 9.4%.

Rio de Janeiro-based Vale is the world's number one producer of the steelmaking raw material and BHP comes in at number three behind fellow Australian miner Rio Tinto. BHP and Vale made steady gains as details of the deal leaked out over the past few days and the iron ore price moves back above the $50 a tonne level.