Abstract: Sponge iron is produced at a shaft furnace from iron ore, preferably in the form of pellets, whereby a hot reduction gas is passed upwardly through the shaft furnace and the iron ore descends therein. The hot reduction gas is formed in part by a desulfurized fresh gas produced by partial oxidation of a hydrocarbon (generally high sulfur residual oil) and desulfurization and, in part, by recirculated exhaust gas drawn from the head of the furnace and having its carbon-oxide content reduced by about ten volume percent. The fresh gas is mixed with the recirculated exhaust gas in a volume ratio of fresh gas/exhaust gas of 0.8:1.0 to produce a cold mixed gas. The cold mixed gas is heated to a temperature of about 1000.degree. C directly before being introduced into the shaft furnace as reduction gas.