Brazilian firefighters said on Saturday that at least 40 people were killed when a dam burst at an iron ore mine owned by Vale, as rescuers continued to search for hundreds still missing.

The Minas Gerais state fire department also said 23 people have been hospitalised after the dam released a torrent of mud on Friday, leaving a roughly 150-metre-wide wake of destruction.

In an earlier statement, the department had said 300 people were still missing and 46 had been found alive.

Firefighters focused their hopes for finding survivors on a bus, a train, mining offices and nearby homes that were buried on Friday in mud after the dam break at Vale's Corrego do Feijao facility in Minas Gerais state.

Frantic family members of the missing crowded into a warehouse set up by Vale for those affected, next to a stretch of river now demolished by the sludge.

More than a dozen helicopters helping to survey the area took off and landed from a football field nearby.

"Unfortunately, at this point, the chances of finding survivors are minimal. We're likely to just be recovering bodies," Romeu Zema, governor of Minas Gerais, told local media.

Among those missing are up to 200 residents of the rural area of Brumadinho in the state of Minas Gerais, where the mine was located, as well as about 100-150 miners, operated by mining company Vale.

Vale president Fabio Schvartsman said he did not know the cause of the accident and added that the company had taken measures to boost security at dams.

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Brazil's Environment Ministry announced a prompt fine of 250 million Brazilian real ($66.2m) against the mining company.

Local media reported that authorities had seized company assets as a security.

Photos and videos showed a torrent of mud flowing through Brumadinho, with the sea of sludge inundating roads and homes.

People were seen being plucked to safety from the sludge by rescue helicopters.

President Jair Bolsonaro, who has previously pledged to give more free rein to companies and has dismissed environmental concerns, was flown to the area by helicopter on Saturday.

"We will do everything in our power to help the victims, to minimise the damage, to investigate the facts, to ensure justice and to prevent these tragedies for Brazilians and the environment in future," Bolsonaro wrote on Twitter.

The accident comes three years after Brazil's worst environmental disaster when a larger dam owned jointly by Vale and BHP Billiton broke in the same region, burying local homes and killing 19 people.

Friday's incident appeared to pale in comparison with the 2015 disaster in Mariana in Minas Gerais when the tailings dam at the Samarco iron ore mine burst.