Turkish steelmaker Tosyali Holding will reportedly invest up to $5bn in a new steel plant in Saudi Arabia.

“Our aim is to make the best quality steel from the best technology in a sustainable, efficient and carbon-neutral way,” the company’s chairman Fuat Tosyali told Bloomberg on the sidelines of the World Economic Forum on 17 January.

The company intends to produce steel with the help of green energy sources. For that to happen, the company said it will increase its solar energy output by tenfold to 2,500MW, up from the 240MW it currently uses. Tosyali’s chairman noted that the transition will happen through a $1.5bn investment, as well as plans to buy a stake in a hydrogen energy company, without disclosing further details.

News about the investment comes against the backdrop of an expansion spree, which has seen the company launch projects in Algeria, Angola, Senegal and Spain. Saudi Arabia is a leading steel producer in the Middle East and North Africa Region, with an annual production capacity of over 10 million tonnes, according to equity management tools platform Rasmal.

Government officials in Riyadh have pushed to transition to an economy less reliant on fossil fuels. For instance, in October 2023, Saudi Arabia launched the Neom Investment Fund. The fund serves as the strategic investment arm of Neom, which is a proposed 26,500sqkm new urban area planned by the kingdom to serve as a financial and global trade hub in the country.

Steelmaking plays a major role in that transition, supporting crucial industries such as Saudi Arabia’s infrastructure and construction sectors. To put that into perspective, the planned city of Neom requires around 600km of large-diameter carbon steel pipe to facilitate water transmission.

“Steel is the driving force behind the advancement of the economic development of the Kingdom of Saudi Arabia,” according to a statement on Saudi Arabia’s National Committee for Steel Industry. “Steel lies at the heart of progress, from medical instruments to solar power, from high-tech forging to our transportation network. It is the platform of our future.”