In the A1 module (assuming you use EPD taxonomy) you will calculate the impacts from extraction of raw materials, and production of semi manufactured products. As you will need 1.000.000 kg into your production (A3), you need to model 1.000.000 kg in A1. The reference quantity in the A1 module will be 1.000.000 kg. The A3 module will have an input flow of 1.000.000 kg, and two output flows: one product stream for 700.000 kg, and one scrap flow for 300.000 kg.
Modelling the recycled material depends on your modelling choice. You should model according to the methodology choice (cut-off, APOS, consequential, etc.).
As Sjamil suggests, modelling the environmental impacts from 1 kg of recycled materials, and then using 300.000 kg of this material, in addition to 700.000 kg virgin, is a very clear and intuitive way to model. This will give a clear understanding of inputs and outputs.