ISPAT International, the fast growing international steel group which is buying Irish Steel, is planning to invest about $950 million (£600 million) in a Kazakhstan steel works, the second largest in the former Soviet Union.

The deal would be the biggest foreign investment in Kazakhstan and one of the biggest in the former Soviet Union.

The sale of the Karmet works, which employs 38,000, was announced by the Kazakhstan government in November. But Ispat's financial commitment was disclosed only yesterday, by Mr Lakshmi Mittal, the company's chairman, founder and owner.

Mr Mittal said Ispat was paying $450 million for Karmet's assets and some of its liabilities, including the unpaid wages of the loss making plant's workforce. The company intended to invest about $500 million modernising Karmet over five years and extending its sales network outside the former Soviet Union to east Asia and elsewhere. Mr Mittal said he hoped to raise output at Karmet, which was running at 40 per cent capacity, from less than 2.5 million tonnes a year to six million tonnes.

Even before the planned modernisation is completed, the acquisition will this year add about $1 billion to Ispat's annual turnover of $2 billion.