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The Fundao dam breached around 4.20 p.m. (local time) on Thursday and released a torrential flow of water and mud into the town of Bento Rodrigues, Xinhua news agency reported.
The town was awash, buildings swamped with water and vehicles swept away, the report said.
Brazil's union of iron and base metal industry workers, Metabase, gave the number of 15 people dead.
According to news website G1, around 45 people were missing including 30 who were working on the dam at the time.
Minas Gerais' civil defence agency, however, could not confirm the numbers.
The nearest town Mariana, with a population of about 40,000 people, stands about 20 kms away from the dam.
The residents of Mariana have started a collection campaign to bring food, water and medical supplies to Bento Rodrigues town.
Braz Azevedo, Mariana's secretary of social defence, said the situation is very serious and there was a risk of more mudslides.
The dam belongs to Samarco, a mining company, which issued a statement after the accident, saying it "could not currently confirm the cause or size of the incident."
The Brazilian Dam Committee called "the bursting of the Samarco dam could be the worst ever registered in Brazil."
Prior to this, the deadliest dam disaster in the country took place in 1986 when the Mina de Fernadinho dam broke, killing seven people.
A tailings dam, serves to hold waste earth and rock after ores have been separated while also recycling the water used in processing.
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