A dam holding back waste water from an iron ore mine in Brazil that is co-owned by BHP Billiton has burst, unleashing a deluge of thick, red toxic mud that has smothered a village and killed at least 17 people, an official says.

More than 50 more were injured in the disaster in Brazil's south-eastern Minas Gerais state, said Adao Severino Jr, fire chief in the city of Mariana.

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The number of missing is set to surpass 40, Mr Severino said, but the toll was not yet official.

The G1 news service of the Globo Media group reported that between 15 and 16 people died and 45 others were missing, citing the local union.

Civil defence authorities could not confirm casualties and said numbers reported in Brazilian media were speculative.

At a media conference in Melbourne, BHP Billiton's CEO Andrew Mackenzie said it had yet to fully assess the extent of damage and casualties from the massive mudslide.

"Most of what happened there has been under the cloak of darkness," Mr Mackenzie said.

"At daybreak, clearly we will do an awful lot more and give you further updates.

"We have of course offered our full and complete assistance to the Samarco team and to the local authorities, in the first instance to manage the immediate rescue efforts, and then of course to help with the very important cleanup and afterwards the investigation."

The head of emergency planning at Samarco, a 50-50 joint venture between top iron ore miners Brazil's Vale and Australia's BHP, told GloboNews of reports of seismic activity in the area in the hour leading up to the incident.

The company's press representatives could not confirm the reports.

Civil defence authorities in Mariana said it was evacuating about 600 people to higher ground from the village of Bento Rodrigues, where television footage showed dozens of homes destroyed by the mudslide.

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The footage showed a car rested on top of a wall where the roof of a building had been ripped off.

Bento Rodrigues has a population of about 600, most of whom work for the mining company.

"The situation is grim. It is dark. There is a lot of mud," Mr Severino said. "There is no way to survive under that material."

Some homes seemed to have been swept hundreds of metres by the rushing wall of mud.

Rescue crews continued to search the muddy waters after nightfall.

Mariana mayor Duarte Junior said teams are having trouble reaching the site.

"The closest we could get was more or less 500 meters. We cannot get closer because of the mud," he said. "We do not really know what happened."

Brazilian army units nearby stood ready to help the search and rescue effort and the minister of national integration, Gilberto Occhi, planned to visit the state on Friday to provide assistance, according to a note from the presidency.

They said the flood had also reached another village further down the hill, called Paracatu de Baixo, and that inhabitants there were being evacuated.

The dam was holding tailings, a mining waste product of metal filings, water and occasionally chemicals. It was located near the Gualaxo do Norte river, adding to fears of potential water contamination.

Samarco produces about 30 million tonnes per year of iron ore, just under 10 per cent of Brazil's output. Iron ore is transported down a slurry pipe from Germano to Espirito Santo, where it is turned into pellets.

Reuters/AFP