A major Turkish-Libyan industrial complex in Benghazi is positioning eastern Libya as a potential Mediterranean hub for lower-carbon iron, exports and downstream steel manufacturing. Libya is positioning one of its largest industrial investments outside the oil sector around a resource it has long possessed in abundance but historically underutilised for industrial diversification: natural gas.
A Turkish-Libyan joint venture developing a major steel complex in Benghazi expects the project to attract approximately $2.5 billion in investment, with commercial production targeted for early 2028.
The project, developed by Tosyali SULB Steel Industries, is designed to produce direct reduced iron (DRI), a major steelmaking input that can be produced using natural gas rather than the coal-intensive processes associated with conventional blast furnaces. At full scale, the complex is expected to have capacity for approximately 8.1 million tonnes of DRI annually.
The scale makes the project significant not simply for Libya’s steel industry, but for the country’s wider attempt to establish productive capacity beyond hydrocarbons.
From Natural Gas to Industrial Value
The industrial logic behind the Benghazi project is straightforward: convert Libya’s energy advantage into higher-value industrial output.
Rather than exporting hydrocarbons and importing finished industrial products, the project aims to use natural gas as an industrial feedstock for producing DRI and subsequently supplying steel products.
The first phase is expected to produce approximately 2.7 million tonnes of DRI annually, with gas supply arrangements already finalised. A dedicated power station is also being constructed to provide a substantial share of the complex’s electricity requirements.
That combination, gas, power, port infrastructure and steel production, gives the project characteristics of an integrated industrial platform rather than a standalone manufacturing plant. It is precisely this type of infrastructure that can determine whether resource-rich economies remain primarily exporters of raw materials or develop the capacity to capture more value domestically.
Benghazi’s Mediterranean Advantage
Location is central to the investment thesis.
The complex is being developed in Benghazi, a major port city on Libya’s Mediterranean coast. That gives the project direct maritime access to European and African markets while positioning eastern Libya close to one of the world’s most important industrial and trading regions.
Around 90% of the project’s production is expected to be exported, according to Tosyali SULB Chairman Ahmed Gadalla, while the complex will also produce reinforcing steel and pipes for the domestic Libyan market.
This export orientation is significant. Libya is not attempting to build a steel industry solely around domestic demand. Instead, the project is being designed as an internationally competitive production and export platform.
Its Mediterranean position potentially allows it to serve European steelmakers looking for lower-carbon inputs while also accessing North African and wider African markets. That geographic proposition could become increasingly important as European manufacturers face rising energy costs, tighter environmental requirements and pressure to reduce the carbon intensity of industrial supply chains.
The Rise of DRI in the Global Steel Transition
The choice of DRI is strategically important. Traditional steel production through blast furnaces relies heavily on coal, making the sector one of the largest industrial sources of carbon emissions. DRI provides an alternative route, particularly when natural gas is used as the reducing agent and when the process can eventually transition towards hydrogen.
This does not make gas-based DRI a zero-carbon technology. But it can provide a lower-emissions pathway compared with conventional coal-based ironmaking and potentially create infrastructure that can evolve as cleaner reducing technologies become commercially viable.
For Libya, that creates an opportunity to position its gas resources within a changing global steel market. The question is whether the country can eventually move from gas-based lower-carbon iron towards increasingly renewable or hydrogen-enabled production, while maintaining competitive energy and logistics costs.
That will determine how durable the project’s industrial advantage becomes.
A $2.5bn Bet on Industrialisation
The projected investment is substantial by Libyan industrial standards.
The Benghazi complex was first announced in 2024 and represents one of the largest economic developments in territory controlled by eastern Libya’s authorities. The investment also arrives against the backdrop of Libya’s long-running political division between competing authorities in the east and west.
That political context cannot be separated from the investment story. For years, Libya’s instability and fragmented governance have constrained large-scale foreign investment outside the hydrocarbons sector. Yet tensions between eastern and western authorities have eased in recent years, while foreign governments and companies have expanded their engagement with eastern Libya.
The Tosyali-SULB partnership therefore represents more than an industrial transaction. It is also a test of whether large international businesses can establish long-term productive assets in an environment where political and institutional risks remain material.
Turkey Deepens Its Industrial Footprint
The project also demonstrates the growing importance of Turkey’s commercial relationship with Libya.
Tosyali Holding, one of Turkey’s major steel producers, brings industrial expertise and access to international steel markets, while Libya United Steel Company for Iron and Steel Industry (SULB) provides the Libyan partnership base.
Turkey has maintained strong economic and political relationships with western Libya while Turkish companies have increasingly expanded their commercial presence across sectors including construction and energy. The Benghazi project indicates that this economic relationship is also extending into eastern Libya.
For Turkey, the opportunity is potentially two-sided: access to a strategically located production base and deeper integration into North African industrial supply chains. For Libya, the attraction lies in bringing foreign capital, technology, industrial management and market access into a sector capable of generating value beyond crude oil.
The Domestic Value-Addition Question
The export orientation of the project is commercially logical, but its domestic industrial impact will be determined by how much value remains within Libya. The inclusion of rebar and pipes for the Libyan market is therefore important.
Those products move the project further downstream than simply exporting DRI. They can supply construction, infrastructure, energy and manufacturing activity associated with Libya’s eventual reconstruction and economic expansion.
This creates the possibility of an industrial chain extending from:
Natural gas → DRI → steel → rebar and pipes → construction and infrastructure.
That chain matters because Libya’s reconstruction needs are extensive.
If domestic steel production can become competitive, it could reduce reliance on imported construction materials while creating demand for logistics, engineering, maintenance, fabrication, technical services and industrial labour.
The multiplier effect could ultimately become more important than the headline investment figure.
Can Benghazi Become a Regional Steel Hub?
The project’s long-term potential extends beyond Libya.
North Africa is already home to major steel production and industrial centres, while Europe’s proximity creates a large potential market for semi-finished and lower-carbon industrial inputs.
Benghazi’s Mediterranean position gives it an opportunity to participate in these regional supply chains. But becoming a regional hub will require more than production capacity. The project will need reliable energy, competitive port logistics, predictable regulation, skilled labour, efficient customs processes and stable access to international markets.
It will also need to demonstrate that its emissions profile and production methods can meet increasingly stringent requirements in destination markets.
This is particularly important as European industrial policy places greater emphasis on the carbon intensity of imported products. A competitive DRI producer near European markets could benefit from that transition; but only if it can demonstrate credible environmental performance.
Infrastructure Will Determine the Investment Outcome
The construction of a dedicated power station alongside the industrial complex highlights a central issue for African industrial projects: industrial competitiveness depends on infrastructure reliability. A steel plant cannot operate efficiently if electricity supply is unstable, gas delivery is unreliable or port logistics are inefficient.
The Benghazi project is therefore effectively an infrastructure ecosystem. Its success will depend on the interaction between:
- natural-gas supply;
- dedicated electricity generation;
- port capacity;
- industrial logistics;
- export infrastructure;
- water and utilities;
- skilled technical labour; and
- access to international financing and markets.
This is precisely where large industrial projects can generate wider economic spillovers. Industrial infrastructure built for one project can, if appropriately planned, become the foundation for an industrial cluster.
Libya’s Opportunity to Diversify Beyond Oil
The strategic importance of the project ultimately lies in what it says about Libya’s economic diversification challenge. Hydrocarbons will remain central to Libya’s economy for the foreseeable future. But oil and gas revenues alone do not automatically create diversified productive capacity.
The more consequential development would be the conversion of energy revenues and natural resources into industrial capabilities that generate additional value. Steel is particularly relevant because it sits at the foundation of construction, infrastructure, manufacturing, energy projects and industrial development.
A competitive domestic steel ecosystem could therefore support sectors well beyond metallurgy. That makes the Benghazi project potentially relevant to Libya’s broader reconstruction agenda.
A New Mediterranean Industrial Corridor?
There is also a wider regional question. If the Benghazi complex reaches its planned scale, eastern Libya could become part of an emerging North African industrial corridor connecting energy resources, ports, manufacturing capacity and European markets.
Libya’s Mediterranean coastline provides geographic proximity to Europe, while its position in North Africa gives it potential access to neighbouring African economies.
This could create an industrial model different from the traditional African resource-export model:
energy resources + industrial processing + maritime logistics + export markets.
The opportunity is substantial, but so are the execution requirements.
A $2.5 billion investment can establish industrial capacity. It cannot by itself guarantee an industrial ecosystem. That will depend on policy consistency, infrastructure, political stability and the ability to develop domestic capabilities around the project.
Strategic Context
The Benghazi project arrives as global steelmaking enters a period of structural change.
Steel producers face pressure to reduce emissions while maintaining competitiveness. Europe is tightening the environmental requirements associated with imported industrial products. Meanwhile, countries with access to relatively competitive natural gas and renewable energy are examining opportunities to produce DRI and other lower-carbon steel inputs for international markets.
That places North Africa in an increasingly interesting position. Countries with energy resources, ports and proximity to Europe could potentially become competitive suppliers of lower-carbon industrial materials.
Libya’s challenge is to convert that geographic and resource advantage into reliable industrial infrastructure. The Benghazi project is therefore not simply about producing iron.
It is a test of whether Libya can begin transforming its energy advantage into an industrial advantage.