Mumbai: The world''s number one steel company Arcelor Mittal will sign a memorandum of understanding (MoU) with the Orissa government for setting up a 12 million-tonne steel plant in the state''s Keonjhar district.

A high-level clearance authority (HLCA) headed by chief minister Naveen Patnaik has cleared the Rs40,000 crore project, which would be completed in two phases of six million tonnes each.

A joint working group, comprising officials of Mittal Steel India Ltd and the state government, gave final shape to the project proposal.

The project, proposed to be set up in the tribal-dominated Patna tehsil of Keonjhar district, needs 8,000 acres of land and would draw water from the Baitarani river.

The Arcelor Mittal project compares in size with as South Korean steel major Posco''s proposed plant near Paradip.

The company would invest Rs22,000 crore in the first phase for building six million tonne steel capacity and a 750 MW captive power plant.

The HLCA also cleared the Ruchi group''s proposal for a three million-tonne steel project, involving investment of Rs7,500 crore and the UK-based Stemcor group''s proposal for a Rs1,500 crore pelletisation plant.

These projects were earlier cleared by the state level single window clearance authority (SLSWCA) headed by the chief secretary.

Arcelor Mittal, owned by L N Mittal, is the world''s number one steel company, with 330000 employees in more than 60 countries.