New Delhi: Country's top iron ore producer NMDC plans to invest Rs 3,513 crore on its upcoming 3 million tonnes per annum capacity steel plant at Nagarnar in Chhattisgarh.

According to the Budget documents, the state-owned firm has kept a capital expenditure target of Rs 4,655 crore in the next fiscal and over 75 per cent of the amount (Rs 3,513 crore) will be spend on the Chhattisgarh plant, which would mark NMDC's entry into steel manufacturing.

"Work on the plant is on full stream and it will be commissioned on time (in 2014). Most of the packages, out of seven, have been awarded," a senior company official said.

NMDC is funding entire investment for the project, estimated at Rs 15,500 crore, from its internal resources.

The official added that the plant will initially produce HR-coils (hot rolled coils) and NMDC is planning to create a separate marketing division for selling the steel products.

"Gradually, the plant will also move towards production of cold rolled and other steel products," the official said.

The plant will get iron ore from company's existing mines at nearby Bailadila, while the coking coal is planned to be imported.

Rest of NMDC's capex at Rs 1,142 crore is planned to be spend on existing iron ore mines and related projects, including Bailadila and Kumaraswamy mines and pelletisation plant at Donimalai in Karanatka, according to the Budget documents.

For the PSU, the Budget -- presented on Friday-- has been a mixed bag as it will have to pay higher service tax on its investments in Chhattisgarh steel plant, although the impact will be largely negated due to duty reduction on machinery imported for iron ore pellet/beneficiation plants.

"We will have to pay higher service tax on our new investments (at Chhattisgarh and other locations) but it would get offset due custom duty reduction on plant and machinery imports to 2.5 percent," NMDC Director Finance S Thiagarajan said.

The mining firm is expecting to produce 27 million tones of iron ore this fiscal. Besides, it is also eyeing to acquire 3 overseas mineral assets by June-July.

(Agencies)