Perth (Australia), Jan.25 (ANI): Perth-based India Resources Ltd (IRL) has announced plans for a 500 million dollar deal with a group of Indian sponge iron producers.

Sponge iron, also known as direct-reduced iron, is produced by reducing iron ore using natural gas or coal and can be used to create wrought iron.

Under a letter of intent signed between IRL and Bankura DRI Mining Manufacturers Company Private Ltd, the Perth-based IRL will supply coal at a rate per tonne loaded on to Bankura’s trucks.

According to news.com.au, the latest deal follows an agreement penned last year that foreshadowed an IRL subsidiary having sole and exclusive rights to develop part of the Raniganj Coalfield, in the Indian state of West Bengal.

As per the agreed mine plan, IRL would deliver coal at a rate of 30,000 a year in the third year, ramping up to 480,000 tonnes per annum in the seventh year of operation, the company said.

Bankura will advance IRL 1.2 million dollars to commence final design and initial mobilisation work, and IRL will have six months to establish funding for the infrastructure program.

It is expected a formal contract will be signed in two months.

Bankura is a group of six constituent companies that own 11 sponge iron units. (ANI)