Steel is a crucial industrial product with applications in various sectors, such as construction, engineering, and industry. However, the steel industry generates significant waste, contributing to greenhouse gas emissions and environmental challenges. To address this issue, incorporating solid waste, especially sludge with high moisture content, into the steel industry’s operations is essential. This study aimed to construct and test an active indirect solar dryer for reducing the moisture content of sludge from a steel drawing industry. By employing principles of the circular economy and the environmental, social, and governance concept, the drying process showed promising results, achieving approximately 42% moisture reduction. This study involved collection and characterization of industrial sludge, design and assembly of a hybrid active indirect solar dryer, fluid dynamic analysis of the behavior of the air inside the device through CFD Ansys software 2012, tests with a thermographic camera to validate the simulation, and optimization of the sludge drying by calculating the thermal efficiency and drying efficiency of the equipment. The adoption of such drying processes can lead to substantial cost reductions in the transportation, handling, and landfilling of steel-drawing sludge, promoting innovation and aiding global steel industries in achieving their solid waste disposal targets.