Libya DRI Exports: Could Britain Become a Buyer?

Britain's move toward electric arc furnace steelmaking could increase demand for imported primary iron. Near Benghazi, Ahmed Gadalla's $2.5 billion Tosyalı-SULB project is preparing to enter the DRI market, although its prospects as a supplier to the UK remain untested.

British steelmakers are facing their widest electricity-cost disadvantage against French competitors in three years, adding to concerns about the industry's ability to compete as it shifts toward electric arc furnace production.

According to figures reported by The Guardian on October 19, 2026, British producers pay almost £30 more per megawatt-hour for electricity than their French counterparts and approximately £12 more than steelmakers in Germany. The figures, based on analysis by industry association UK Steel, highlight the pressures facing manufacturers whose production processes increasingly rely on electricity.

The transition also raises a separate question about raw materials. Electric arc furnaces can manufacture steel from recycled scrap, but producers of certain higher-quality grades still require primary iron derived directly from iron ore.

A UK government-commissioned study estimates that Britain's primary iron requirements could reach between two million and three million tonnes annually during the 2030s. Whether the country will manufacture that material domestically or rely partly on international suppliers remains an important question for its steel industry.

This creates a potential opening for Libya DRI exports, particularly as new ironmaking facilities are developed along the Mediterranean.

Near Benghazi, Turkish steelmaker Tosyalı Holding and Libya United Steel Company for Iron and Steel Industry (SULB) are constructing a direct reduced iron complex valued at approximately $2.5 billion. The project, chaired by Libyan businessman Ahmed Gadalla, is being developed primarily for export markets, with its first production phase targeting commercial operation in early 2028.

No British steelmaker has publicly announced an agreement to purchase iron from the facility. Nevertheless, Britain's changing manufacturing requirements provide a reason to examine whether Libya could eventually become a competitive source of primary iron.

Why British steelmakers need primary iron alongside recycled scrap

Britain generates substantial quantities of steel scrap, much of which has historically been exported for processing elsewhere. The expansion of electric arc furnace technology offers an opportunity to retain more of that material within the domestic steel industry.

Tata Steel's transformation of its Port Talbot works in Wales is among the most prominent examples. The company is replacing conventional blast-furnace production with an electric arc furnace designed to manufacture steel using recycled metallic materials.

The difficulty is that not all scrap is suitable for every steel product.

Copper and tin can accumulate in recycled steel, and these residual elements are difficult to remove during conventional electric arc furnace processing. Excessive concentrations can affect the mechanical properties and surface quality of certain products, particularly flat steels used in demanding manufacturing applications.

Ruth Lowe, Tata Steel UK's Head of Technical – Primary Raw Material, discussed the issue in a company explanation of its electric arc furnace transition. The challenge concerns the quality and consistency of the available scrap, as well as the amount that can be collected and processed.

Primary iron provides one way to manage these limitations. Direct reduced iron (DRI), hot briquetted iron (HBI) and pig iron can be blended with scrap to help steelmakers achieve the chemical composition required for particular products.

The proportion needed varies between manufacturers. Producers of reinforcing bars and other relatively straightforward grades can often rely heavily on scrap, while companies manufacturing specialist or higher-quality flat steels may require additional low-residual iron.

Britain's transition toward electric arc furnaces could therefore increase demand for selected primary iron products even as domestic scrap recycling expands.

How much primary iron could the UK steel industry need?

The UK Primary Steelmaking Review 2025, prepared by the Materials Processing Institute and published alongside the government's steel strategy in March 2026, provides a detailed assessment of future requirements.

The review estimates an initial need for approximately one million tonnes of primary iron annually as Britain expands electric arc furnace production. Under its longer-term scenarios, requirements could increase to between two million and three million tonnes during the 2030s.

These figures represent modeled industrial requirements rather than confirmed import orders. They reflect assumptions about the development of British steelmaking capacity, the grades manufacturers intend to produce and the pace at which existing facilities are replaced.

The review identifies imported DRI and pig iron as possible near-term supply sources. It also examines the potential for domestic direct-reduction capacity, although such an investment would require substantial capital expenditure and access to competitively priced energy.

Britain already obtains primary iron from international markets. The UK steel strategy, updated on October 14, 2026, explicitly states that existing British steelmakers currently have access to the iron products they require.

The opportunity for a new supplier is therefore associated with future growth, supplier diversification and commercial competition rather than an immediate shortage.

Energy costs will play an important role in those decisions. The Materials Processing Institute's review examines the possibility that British manufacturers could obtain primary iron from regions where the reduction of iron ore can be undertaken more economically.

This is where Libya's emerging direct reduced iron capacity becomes relevant.

Ahmed Gadalla and Libya's $2.5 billion Tosyalı-SULB project

At Ras Al-Mangar, east of Benghazi, Tosyalı-SULB is developing one of Libya's largest recent industrial investments.

The Turkish-Libyan joint venture plans to manufacture direct reduced iron for domestic and international steel markets, using natural gas as its initial reducing agent.

Ahmed Gadalla, chairman of Tosyalı-SULB and founder and chairman of Alushibe Holding Group, has presented the development as part of a broader effort to expand Libya's manufacturing and export capacity beyond hydrocarbons.

In written responses published by Reuters on September 10, 2026, Gadalla said approximately 90% of the project's planned production would be directed toward exports, with Europe and Africa among the intended markets.

The investment has progressed beyond its original announcement. In February 2025, Midrex Technologies and SMS group confirmed an equipment order for a facility designed to produce 2.5 million tonnes of cold DRI annually.

The plant will use MIDREX Flex technology, which removes oxygen from iron ore using a reducing gas without melting the ore in a traditional blast furnace. The system can initially operate with natural gas and incorporate increasing quantities of hydrogen if commercially viable supplies become available.

Plans for the wider complex have evolved since the original announcement. Earlier project statements described eventual annual production capacity of 8.1 million tonnes. An October 14 report by SteelOrbis, citing updated company information, gives a planned three-phase capacity of up to 7.5 million tonnes.

The same report stated that construction had reached approximately 40% completion, with commercial production targeted for early 2028. The construction percentage is company-reported and does not establish that the facility has entered operation.

Gadalla has also discussed the infrastructure needed to support production. He told Reuters that gas arrangements for the first phase had been finalized and that a dedicated power station was being developed to meet a substantial portion of the complex's electricity requirements.

The project has a clear export ambition, although important commercial details remain undisclosed. Contracted gas prices, production costs and future export-handling arrangements have not been made public in sufficient detail to evaluate the plant's competitive position.

For prospective British customers, those details will eventually matter as much as the scale of the investment.

Could Libya export cold DRI to British steelmakers?

One of the most important questions concerns the product that Tosyalı-SULB intends to manufacture.

The first contracted production phase is designed for cold direct reduced iron rather than hot briquetted iron. Both products can be used in electric arc furnaces, but their characteristics during storage and transportation differ.

Cold DRI is porous and reactive when exposed to moisture and oxygen, requiring appropriate precautions during handling and maritime shipping. HBI is produced by compacting hot DRI into dense briquettes, making it generally more suitable for bulk transportation over longer distances.

Cold DRI can nevertheless be transported internationally. Midrex has documented the experience of the Nu-Iron facility in Trinidad and Tobago, which developed specialized procedures for transporting cold DRI by sea.

That commercial precedent demonstrates that overseas shipments are technically possible, although the costs and infrastructure requirements differ between projects.

For the Benghazi facility, the economic calculation will involve port infrastructure, cargo-handling arrangements, vessel availability and the safety requirements associated with shipping the intended product.

Libya's Mediterranean coastline offers relatively direct shipping routes to southern Europe and onward to British ports. Shorter distances can provide a freight advantage, but the final delivered cost also reflects handling, storage and product specifications.

British steelmakers would need detailed information about the iron content, metallization and residual elements of the material before determining whether it could meet their production requirements.

No publicly disclosed agreement establishes that Tosyalı-SULB has secured a British customer or finalized the arrangements needed to deliver its cold DRI to the UK.

The commercial opportunity is plausible, but remains unproven.

Libya DRI exports would face competition from established suppliers

Libya would not be entering the international primary iron market for the first time.

The Libyan Iron and Steel Company in Misrata already operates direct-reduction facilities and has exported iron products to international customers.

According to GMK Center's analysis of Eurostat trade data, EU countries imported approximately 328,220 tonnes of DRI from Libya in 2025.

These exports establish that Libyan iron products already participate in European supply chains. The Tosyalı-SULB development would expand the country's potential production capacity substantially, although its own product specifications and commercial arrangements will need to be established separately.

The Turkish partner brings experience from an existing North African operation. According to Midrex Technologies, Tosyalı Algérie's second DRI module produced approximately 2.43 million tonnes in 2025, setting a record for annual output from a single module.

That operating history is relevant to the company's technical capabilities, but Libya's infrastructure and energy arrangements present their own challenges.

Competition is also growing in the Gulf.

Meranti Green Steel is developing an HBI plant in Oman's Duqm Special Economic Zone, with first-phase capacity planned at 2.5 million tonnes annually.

In January 2026, the company announced offtake arrangements covering the intended output of its first production module. The agreements involve established international trading companies, including Thyssenkrupp Materials Trading and INTERFER, with European countries among the planned destinations.

The Omani facility has not yet established a commercial production record, but its announced arrangements demonstrate the importance of securing buyers before output begins.

The Benghazi project is also attracting attention for its wider commercial potential. LIM has separately examined Libya's $2.5 billion iron project in the context of Gulf trade and industrial investment.

For any new DRI supplier, the commercial challenge is to demonstrate an advantage over established producers through material quality, dependable delivery and competitive prices.

How will energy costs and UK carbon rules affect Libyan DRI exports?

Britain's electricity-cost disadvantage provides one reason to examine imported primary iron, although the economics of iron reduction and steelmaking need to be considered separately.

Producing DRI involves converting iron ore into metallic iron using a reducing gas. British steelmakers would subsequently melt the imported material in electric arc furnaces, often alongside recycled scrap.

Purchasing DRI from Libya would therefore leave British producers exposed to the electricity costs associated with melting and refining steel.

The potential advantage concerns the cost of producing primary iron before it reaches the British furnace.

Libya has substantial natural gas reserves, but the commercial value of those resources depends on the price and reliability of supply to industrial facilities. The Tosyalı-SULB project's expected production costs cannot be established from national gas-reserve figures alone.

Gadalla's confirmation that gas arrangements have been finalized indicates progress in preparing the facility for operation. However, the absence of publicly disclosed pricing and contractual volumes prevents an independent assessment of its future cost competitiveness.

British carbon regulations introduce a further consideration.

The UK's Carbon Border Adjustment Mechanism is scheduled to enter into force on January 1, 2027, before the Libyan project's targeted commissioning.

Official UK government documentation identifies DRI under commodity heading 7203 among the iron and steel products covered by the mechanism.

The system places a carbon-related charge on the embodied emissions of specified imported goods, making verified production data relevant to the commercial position of overseas suppliers.

Gas-based direct reduction can generate lower emissions than conventional coal-based ironmaking, although actual performance depends on the facility's energy sources and operating conditions.

The MIDREX Flex technology selected for Tosyalı-SULB can accommodate hydrogen, but its initial production is intended to use natural gas. The plant's actual emissions performance will need to be assessed under those operating conditions rather than on the basis of its future technical capabilities.

British buyers comparing imported primary iron will therefore need to consider production costs, freight expenses and applicable carbon-related obligations when evaluating suppliers.

What would make Libya a credible supplier to Britain's steel industry?

Britain's transition toward electric arc furnace production creates a commercial reason to examine additional primary iron suppliers. The government-commissioned review provides an estimate of future requirements, while the country's steel strategy recognizes imports as one possible source.

Tosyalı-SULB is relevant to this discussion because its first-phase design capacity of 2.5 million tonnes annually is comparable in scale to Britain's modeled primary iron requirements during the 2030s.

That comparison establishes the potential size of the project relative to a future market. It does not indicate that Britain will purchase the output or that the facility will operate at full capacity.

British steelmakers already have access to established suppliers and may pursue domestic DRI investment or improvements in scrap processing. The eventual demand for imported primary iron will reflect those decisions, together with changes in the country's production capacity and steel product mix.

For Tosyalı-SULB, the immediate task is to complete construction and establish reliable industrial operations. Successful commissioning will allow customers to evaluate actual product specifications and production consistency, while confirmed export arrangements will clarify the cost of delivering iron to overseas markets.

Ahmed Gadalla has described the development as a major export-oriented industrial investment for Libya. A future British supply agreement would be consistent with that commercial ambition, but no such arrangement has been publicly disclosed.

With production targeted for early 2028, the project is approaching the period when its operating capabilities can begin to be tested.

Britain's steel transition may create new opportunities for imported primary iron. Libya's ability to capture those opportunities will be determined by the quality and delivered price of its product, supported by reliable production and commercial contracts.

Frequently Asked Questions

Could Libya supply direct reduced iron to the UK?

Libya could become a potential supplier of DRI to British steelmakers as electric arc furnace production expands. Tosyalı-SULB is constructing a major DRI facility near Benghazi, but no publicly disclosed British purchasing agreement has been identified.

What is the Tosyalı-SULB project in Libya?

Tosyalı-SULB is a joint venture between Tosyalı Holding and Libya United Steel Company for Iron and Steel Industry. Its first contracted phase is designed to produce 2.5 million tonnes of cold DRI annually, with commercial production targeted for early 2028.

What is Ahmed Gadalla's role in Tosyalı-SULB?

Ahmed Gadalla is chairman of Tosyalı-SULB and the founder and chairman of Alushibe Holding Group. He has publicly discussed the project's investment plans, natural gas arrangements and ambitions to export most of its planned production.

Why do British steelmakers need primary iron?

Some higher-quality steel grades require primary iron to control residual elements such as copper and tin that accumulate in recycled scrap. DRI, HBI and pig iron can provide additional low-residual iron alongside scrap in electric arc furnace production.

Will Tosyalı-SULB produce green steel?

The first phase is planned to manufacture gas-based direct reduced iron. Its MIDREX Flex technology can incorporate hydrogen in the future, but that capability does not mean the facility will produce zero-emissions iron when commercial operations begin.