Japan's Kobe Steel Ltd. and Steel Authority of India Ltd. are mulling to create a $284 million worth joint venture iron-making plant project in India that will employ the Japanese steelmaker's new iron-making technology.

The two companies, which have agreed to establish the SAIL-KOBE Iron India Pvt Ltd. joint venture, still need to conduct a detailed feasibility study for the proposed plant in West Bengal state in eastern India.

The proposed plant will have an annual capacity production of 500,000 tonnes of iron nuggets. It targets to begin construction in 2013, with operations expected to be online in 2015, a statement on Kobe's website said.

The plant will use Kobe's ITmk3 technology to produce the iron nuggets, which India hopes to utilize for domestic use.

"We will use iron-ore nuggets produced from the plant as feedstock for our electric-arc furnaces," said C.S. Verma, Chairman of SAIL.

Kobe said the iron nuggets from the project may be used by both companies to feed respective domestic requirements. Both also have the option to sell the output in the market.

The two steel giants have been discussing of establishing the joint venture since March last year.