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A joint project between Turkish steelmaker Tosyali and Libyan partner SULB is expected to attract about $2.5 billion in investment to produce lower-carbon direct reduced iron (DRI) in Benghazi, with commercial production targeted for early 2028, according to Ahmed Gadalla, chairman of the joint venture.
The complex targets exporting 90% of its output, with Europe among the key markets, while initially using natural gas to reduce iron ore and produce lower emissions than the traditional blast-furnace route under the EU's Carbon Border Adjustment Mechanism (CBAM).
The project will use Midrex Flex technology, which can initially operate on natural gas and later incorporate more hydrogen if it becomes available. Gadalla told Reuters that gas supply arrangements for the first phase are finalized, while greater use of hydrogen remains a future possibility depending on its availability.
The plant is designed to produce about 8.1 million metric tons of direct reduced iron, or DRI, annually once the full project is completed. The first phase is planned to produce about 2.7 million tons of DRI a year.
Tosyali outlined its export strategy when it announced the project in 2024, saying it planned to supply nearby markets and Europe with hot briquetted iron (HBI), a compact form of DRI suited to transportation and intended for lower-emission steel production.
The Turkish steelmaker already operates two DRI units integrated into its own steel complex in Algeria, with more than 70% of the first module's production sent directly to the neighboring steel plant in 2025. However, the Benghazi project is instead designed mainly to supply reduced iron to external users.
The European Union's Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase on Jan. 1, 2026, covering imports of iron and steel as well as aluminium, cement, fertilizers, electricity and hydrogen. For covered goods, EU importers must report the carbon emissions embedded in their imports and surrender CBAM certificates corresponding to those emissions.
DRI falls within the iron and steel products covered by the mechanism, making the carbon intensity of Tosyali's planned Benghazi output relevant to its European export strategy.
The project's location also gives Tosyali access to Mediterranean shipping routes and potential customers in Europe and Africa, according to Gadalla. The chairman added that Libya's long Mediterranean coastline positions the project to serve both markets, while higher operating costs and environmental compliance requirements in Europe are creating opportunities for lower-carbon iron suppliers.
Tosyali Sulb is also developing infrastructure around the site, including the dedicated power facility. The company previously disclosed that the project is located at Ras Al-Mangar, east of Benghazi, with access to transport infrastructure that supports future exports.
As one of the leading Turkish industrial groups, Tosyali produced 12.1 million tons of crude steel in 2025, ranking 32nd among the world's top steel producers, according to World Steel Association data.
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