Some workers, who do not wish to be identified, have said the mud wasoften illegally discharged at the bottom of the dam into the nearbyBang River .
The local People's Committee held an urgent meeting after the thousands of cubic metres of sludge broke loose.
It is calling for strict punishment against the Na Lung iron ore mine, owned by the Cao Bang Minerals and Metallurgy Company.
The mud flow inundated many houses and fields in Duyet Trung commune and covered roads.
Roads to the mine are still blocked, but the mining company is usingcranes to clear the mud and cleaning waist-deep mud from houses withpumps.
However, the job is expected to take more than two months to complete.
Chairman of the People's Committee Nguyen Hoang Anh told factory ownersto pay rent support to two of the most seriously affected families.
He also told it to compensate farmers for 6ha of agricultural land buried under the mud.
Anh also asked them to build a temporary bridge to enable the trafficto flow and ordered them to prevent any more mud from being released -or escaping - into the river to prevent environmental pollution.
He said the factory would be shut down if it continued to violate environment regulations.
Ma Thi Bach, a resident of Na Keo hamlet in Duyet Trung commune, saidher house was still submerged under 1.5 metres of mud after the waterwent down.
She and her family have had to move to a small tent.
Another resident, Nguyen Van Tuc, said the sludge filled his well and buried the rice paddies of several neighbours.
The head of the Natural Resources and Environment Department'sinspectorate, Le Hong Hai, said the mine admitted the dam, built in2005, was not strong enough.
However, some workers saidthe problem was caused by a big drain at the bottom of the dam used fordischarging waste sludge into the river.
Hai said the minewas fined 70 million VND (3,500 USD) for discharging illegal wastesludge in 2008. He added that they tried to let it out before floodseason.
Deputy head of the provincial Environment Protection Department Doan Ngoc Bau said the dam had been built without permission.
Bau said the department had fined the factory for not providing adesign and environmental impact report on the dam - and still had notcompleted it.
The mine once applied for a permit to buildthe dam with a total investment of 30 billion VND (1.5 million USD),but it was rejected because there was no environmental impact report.
The only good news about the mud flow was that it was not toxic, likethe mud produced at bauxite mines, said vice chairman of the People'sCommittee Nong Van Pao./.