The Libyan Iron and Steel Company (LISCO) signed a memorandum of understanding with the Italian company Danieli on Monday to launch a project to construct a direct reduction plant.

In a Facebook statement, the company said the plant will produce two million tons of sponge and hot briquetted iron annually.

LISCO has shared that this venture will be a collaborative effort, with Danieli holding a majority stake of 51% and the Libyan company with 49%. Following the estimated 3.5 years of implementation, the project is expected to recover its capital within eight years.

The plant will be located within the LISCO and operate using Danieli's EnergIron technology, which competes with American Midrex technology.

The company also pointed out that sponge and hot briquetted iron are currently in demand in both the local and international markets and are requisites for the Italian company.