Abstract: A method for beneficiating a coal refuse feed stream which includes agglomerated carbonaceous and clay particles. The feed stream is rapidly heated to volatilize moisture. Heating is carried out in a manner to produce abrasive commutation and sub-divide particles by volatilizing the moisture. After deagglomerating the feed stream, the discreet particles essentially consisting of carbonaceous particles and clay particles are separated to form a plurality of differently sized classifications of granular particles. A carbonaceous particle fraction essentially comprised of granular particles having a particle size greater than about 2 microns is recovered to form one fraction and a minus 2 micron fraction is classified to separate particles from the component gas. In one embodiment, a dust laden gas fraction is treated in an air classifier to form a coarse particle fraction and a fine particle fraction. The recovered coarse particle fraction can be used as a carbonaceous fuel.