Ranchi, Nov. 17: Essar will set up a Rs 4,285-crore steel plant in Jharkhand.

A memorandum of understanding for setting up the 3 million tonne integrated steel plant was signed between Hy-Grade Pellets Limited ? a joint venture of Essar Steel and UK-based Stemcore Minerals Limited ? and the state government this afternoon.

The inking of the MoU took place in the presence of chief minister Arjun Munda and Essar Group managing director Prashant Ruia at the Project Building secretariat. The MoU was signed by industries secretary Santosh Kumar Sathpathy and company director J. Mehra.

The steel plant, to be set up in two phases on 400 hectares of land, is expected to generate direct and indirect employment for about 10,000 people. The plant is likely to come up in the mineral rich Manoharpur area of West Singhbhum. Munda took Essar officials on an aerial survey to Manoharpur in the evening.

Investment to the tune of Rs 2,645 crore is expected in the first phase and Rs 1,640 crore will be pumped thereafter. The first phase includes the setting up of an iron ore plant with an annual capacity of 3 million tonnes, a pelletisation plant of 5 million tonnes, sponge iron plant of 1.5 million tonnes, light merchant mill and power plant of 100 MW. Another sponge iron plant of 1.5 million tonnes, steel melting shop of 1.5 million tonnes and a wire rod mill will come up in the next phase.

The Essar Group, which has its presence in steel, telecom, power, shipping, petroleum and natural gas and construction, has an asset base of Rs 17,000 crore. HGPL recorded a turnover of Rs 462 crore in the last financial year and expects a 50 per cent jump this year.

Company officials are optimistic of full government support and hope that the project would be given a mega-industry status. ?The government of Jharkhand has promised to provide all help and assistance and would provide capital linkage of iron ore and coal to the project. In addition, the government will help acquire and consolidate land for the project. The other requirements of water, electricity, necessary permission, clearances, roads and railway sidings would also be facilitated by the government,? an Essar official said.

Of the 57 companies that have visited the state for setting up of their units, 40 have signed MoUs. However, no industrial house which signed an MoU with the state has so far set up its unit. This includes the high-profile proposal of Himachal Futuristics, which was to set up a mineral water plant in Hazaribagh and was attracted to the state by then finance minister and Yashwant Sinha.