KOLKATA, India - Japanese steel giant Kobe Steel of Tokyo will on Tuesday sign an agreement with Indian governmental Steel Authority of Indian Limited (SAIL) for a proposed 15 billion rupees ($272 million) iron ore nugget project in eastern state of West Bengal, a SAIL official said.

The agreement will be signed in Tokyo for the project which will be set up in Durgapur, 184 kms from this state capital.

The project will be a joint venture company and SAIL and Kobe Iron India Pvt Ltd will hold equal equity. The proposed plant will have a capacity to produce 0.5 million tonnes of iron nuggets per year.

"The new project is likely to consist of one ITmk3 iron-making plant and associated facilities. About 80 percent of the iron ore required for the plant will be from SAIL mines while the remaining 20 percent will be sourced from dumps," the SAIL official said.

Kobe Steel is one of Japan's leading steelmakers and a major supplier of aluminium and copper products. The Kobe group's business empire includes wholesale power supply, machinery, construction machinery, real estate, electronic material and other businesses.