The Orissa government today signed two memoranda of understanding (MoUs) with Essar group and Tube Investments of India for setting up of two separate steel plants with combined investment of Rs 14, 201 crore.

Of these, the Essar group proposes to set up a four million tonne steel plant at Paradip at an estimated investment of Rs 10,721 crore.

The project will come up under the banner of Hy Grade Pellets Ltd and it envisages setting up of a 1,000 mw captive power plant, which will be located close to the coal mines at Talcher.

The project will be built in two modules of two million tonne each capacity, the work on which will be implemented concurrently. The project is expected to be completed in five years, said Sashi Ruia, the chairman of Essar group.

Sources said, the project is based on Midrex technology, which will use iron ore fines through pelletisation process for making of steel.

The project will use electric arc furnace instead of conventional blast furnace route to make steel.

The steel plant will mostly produce long products and billets. The company, meanwhile, has sought 2,500 acre at Paradip. The construction work will start as soon as the land is provided by the state government, Ruia said.

The other plant is proposed by Tube Investment of India Ltd of Chennai based Murugappa group. The project with an initial capacity of 1.34 million tonne of hot metal per annum will be set up at an investment of Rs 3,480 crore in Kalinga Nagar Industrial Complex at Duburi in Jajpur district.

It will also have a captive power generation of 60 mw and the project is expected to be completed within four years of singing of MoU, said M A Alagappan, chairman of the company.

He added that the company intended to ramp up the capacity to three million tonne in the latter phase.

The final product of the steel plant will be pig iron and HR coils.

The company has applied for 2,500 acres of land at Kalinga Nagar.

Speaking on the occasion Orissa chief minister Naveen Patnaik said both the steel plants together will employ about 20,000 people directly and indirectly. He assured all help to the promoters in terms of iron ore linkage, water and electricity supply to the projects.

He, however, advised the promoters to take care of the environment impact aspects of the project and any possible displacement of people.