largest steel maker, Steel Authority of India Limited (SAIL) and Japan's Kobe Steel Tuesday signed a memorandum of agreement (MoU) for setting up a 0.5 million tonnes per annum iron nugget plant at West Bengal's Durgapur, a statement said Tuesday.

The proposed Rs. 15 billion project at the Maharatna steel major's Alloy Steels Plant in Durgapur will be set up using Kobe's patented ITmK3 technology.

This will be the second biggest Japanese foreign direct investment(FDI) in West Bengal after Mitsubishi Chemicals' MCC PTA project in Haldia.

According to a release, the agreement was signed by SAIL Chairman C.S. Verma and Kobe Steel president and CEO N. Sato at the Japanese steel giant's headquarters in Tokyo.

As per the agreement, SAIL and Kobe Steel will be entitled to equal share of production from the plant for captive use. A joint venture company, SAILKobe Iron India Pvt. Ltd. in which the two steel makers hold equal equity, has already been incorporated.

Speaking on the occasion, Verma said with this joint venture with Kobe, SAIL was going to achieve the twin objectives of bringing in latest technology to the country and also adopting environment-friendly processes.

"This is the first step of our collaboration with Kobe which could extend to other areas in future," he added.

ITMk3 stands for 'iron making technology mark three'. This is a proprietary technology of Kobe for producing a premium quality pig iron (nuggets).