Ranchi, May 6: Mining conglomerate Vedanta today signed a memorandum of understanding (MoU) with the state government to set up a 1 MTPA (million tonne per annum) capacity integrated steel plant in Seraikela-Kharsawan, one of Jharkhand's most industrialised districts.

The MoU was signed today at the office of Udai Pratap Singh, additional chief secretary in-charge of state industries and mining department, where chief executive officer (iron ore) of Vedanta group R. Kishore Kumar and state industries director K. Ravikumar had come.

The MoU papers were signed by Singh and Kishore Kumar, representing the state and Vedanta.

Vedanta has promised to invest around Rs 5,000 crore in the state. For now, an industry department source said the group wants to set up an iron pipe manufacturing unit in the state.

After the pact was signed, state industries director Ravikumar said Vedanta would start work in next seven-eight months to commission the steel plant.

"They have already identified the land for the purpose. The company has already entered into an agreement with villagers to directly purchase between 360 and 390 acres," Ravikumar told The Telegraph .

Vedanta group CEO Kumar said that the company would invest around Rs 1,700 crore in the first phase in the steel plant. "We will now go for the project's feasibility report," Kumar said, adding they aim to start production by 2021.

As far as the group's requirement for iron ore is concerned, it is likely to get a Saranda mine earlier allotted to Sesa Goa, a company which had signed a MoU with the state in the mid-2000s to set up a 0.5 MTPA steel plant in the state. The company's proposed steel plant in Jharkhand never took off and it also merged with Vedanta.

When Sesa Goa's pact with the state was on, the company was allotted an iron ore block in West Singhbhum to prospect iron ore in over 700 hectares of forestland in Dhobil Ankua reserved forest, Saranda division. In 2008, the central government rejected the prospecting proposal.

It is now learnt state government has assured Vedanta that if it begins the process of setting up a steel mill in Jharkhand to ensure value-addition of minerals in the state, the government would allot it iron ore. Today's MoU is a step forward for Vedanta to get iron ore reserves in Jharkhand.

An industry department source said Vedanta's proposal to sign a new MoU was discussed with state government authorities this February during the Make in India Week in Mumbai in which chief minister Raghubar Das and senior bureaucrats from the state took part.