UPDATE 2-Brazil state gives Vale ultimatum on settlement talks

(Updates with comment from Vale)

By Luciano Costa

SAO PAULO, Jan 21 (Reuters) - Brazilian iron miner Vale SA failed on Thursday to reach a legal settlement with Minas Gerais state regarding a deadly dam disaster, with the state warning it would not take "crumbs" and giving a 10-day deadline for a better offer.

About 270 people died in 2019 in the town of Brumadinho in Minas Gerais after a dam burst. The state government and Vale had been in meetings to discuss an agreement, but those negotiations ended unsuccessfully, Mateus Simões, a state official, told journalists.

Vale said in a statement there was no consensus on the amount of compensation or how the money should be used. The producer has so far allocated 10 billion reais ($1.87 billion) for reparations and will continue to compensate victims, it said.

Simões added that Vale now had 10 days to present a new proposal. He declined to talk numbers but said the miner had presented a proposed settlement that was insufficient to remedy the harm caused.

"We won't take just any crumbs they throw. If the value is not enough, it will not be accepted," said Simões, who is Minas Gerais' secretary for state administration. "I'm very bothered by the tone Vale is using ... like if it were giving a present."

The language used by the state was its strongest since the disaster happened almost two years ago.

Simões in January set a floor of 28 billion reais ($5.23 billion) for any possible settlement deal, although federal prosecutor Edilson Vitorelli said on Thursday that the Minas Gerais government and other authorities were seeking a global indemnification of 54 billion reais ($10.1 billion) but acknowledged that number could be flexible.

The dam break was Vale's second such disaster in the span of a few years. In 2015, a dam it owned in partnership with BHP Group - also in Minas Gerais - ruptured, killing 19. ($1 = 5.3506 reais) ($1 = 5.3506 reais) (Reporting by Luciano Costa; Additional reporting by Sabrina Valle; Writing by Marcelo Rochabrun; Editing by Marguerita Choy and Peter Cooney)