The Andhra Pradesh government on Wednesday signed a memorandum of understanding with the National Mineral Development Corporation for supply of iron ore to the proposed integrated steel plant in Kadapa district.

Chief Minister Y S Jagan Mohan Reddy is scheduled to lay the foundation-stone for the steel plant, at Sunnapurallapalli and Peddanandluru villages of Jammalamadugu mandal on December 23.

An extent of 3,295 acres of land has to be acquired in Jammalamadugu area of Kadapa district for the proposed plant.

According to the Chief Minister, the proposed plant would be completed within three years and provide employment to about 20,000 persons.

NMDC Director (Commercial) Alok Kumar Mehta and AP High-Grade Steel Limited CMD P Madhusudan signed the MoU in the presence of the Chief Minister, who termed it historic.

The integrated steel plant will have a production capacity of three million tonnes per annum.

It, thus, requires at least 4.5 million tonnes of iron ore every year.

If not from neighbouring Karnataka, NMDC is expected to supply the ore from its mines in Chhattisgarh though the cost would be higher, official sources said.

The proposal for setting up of the integrated steel plant was included in the AP Reorganisation Act, 2014.

The Government of India constituted a Task Force, chaired by Joint Secretary, Ministry of Steel, to relook into the feasibility aspects of the project.

During the task force meetings, MECON Limited presented its draft feasibility report based on which the preliminary internal rate of return for the Blast Furnace- Basic Oxygen Furnace route was estimated to be 18.95 per cent (pre-tax).

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