At least 10 people have been killed and around 300 are missing after a dam collapsed in eastern Brazil, in a disaster that triggered mudslides and left the surrounding area buried in mining waste.

The death toll was expected to rise sharply said Avimar de Melo Barcelos, the mayor of the mining town of Brumadinho.

Workers at the dam were eating lunch on Friday when the collapse occurred, burying the town in a sea of sludge.

Evacuations began as the flow destroyed a nearby restaurant, cut off roads and reached the nearby community of Vila Ferteco.

Firefighters rescued residents with helicopters, pulling people covered in mud from the waste.

Photos taken in the immediate aftermath show the rooftops of buildings above fields of sludge.

Brazil dam collapse leaves town buried in waste Show all 7 1 /7 Brazil dam collapse leaves town buried in waste Brazil dam collapse leaves town buried in waste A building lays in ruins after a dam collapsed in eastern Brazil. AP Brazil dam collapse leaves town buried in waste A road near Brumadihno is blocked by waste. AP Brazil dam collapse leaves town buried in waste An aerial view of the burst dam in eastern Brazil. AFP/Getty Images Brazil dam collapse leaves town buried in waste The flow of waste spread from the dam to a nearby village. AP Brazil dam collapse leaves town buried in waste A firefighters' helicopter hovers as rescuers work in the search for victims AFP/Getty Images Brazil dam collapse leaves town buried in waste An aerial view shows flooding triggered by a dam collapse near Brumadinho. AP Brazil dam collapse leaves town buried in waste An aerial view after a dam collapsed near Brumadinho, Brazil. AP

Recovery teams on Saturday were digging through the waste as efforts continued to track down the missing.

More than 100 firefighters were at the scene, with another 200 expected to arrive.

"I've never seen anything like it," said Josiele Rosa Silva Tomas, president of Brumadinho resident's association. “It was horrible ... the amount of mud that took over."

"Unfortunately, at this point, the chances of finding survivors are minimal. We're likely to just be rescuing bodies," said Romeu Zema, governor of the mining-intensive state of Minas Gerais where the disaster struck.

The collapse of the dam – which is owned by Vale SA, Brazil's largest mining company – comes just three years after another dam administered by the company and Australian mining firm BHP Billiton burst in 2015 in the city of Mariana, burying a village and pouring toxic waste into a river.

Vale CEO Fabio Schvartsman said he did not know what caused the latest collapse. He said that the burst dam, located at the Feijao iron mine, was being decommissioned and that equipment had shown the dam was stable on 10 January.

Two hours after the accident, Vale's stock fell by 10 per cent on the New York Stock Exchange.

Many local residents were waiting for news of loved ones who had been working near the dam.

Environmental groups and activists said the latest spill underscored a lack of regulation.

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"[The latest spill] is a sad consequence of the lessons not learned by the Brazilian government and the mining companies responsible for the tragedy with Samarco dam, in Mariana, also controlled by Vale," Greenpeace said in a statement.

"History repeats itself," tweeted Marina Silva, a former environmental minister and three-time presidential candidate. "It's unacceptable that government and mining companies haven't learned anything."

Brazil's far-right president Jair Bolsonaro is expected to tour the area by helicopter on Saturday.

He campaigned on promises to jump-start Brazil's economy, in part by deregulating mining and other industries.