Abstract: Improved method for producing steel with the combination of a basic oxygen furnace and a sponge iron plant. The sponge iron produced with a high carbon content, is loaded into the basic oxygen furnace in which oxygen and any type of powder carbon are injected through the bottom. During the melting and refining process, enough reducing gases are produced to yield all the energy needed to reduce iron ore into sponge iron in a batch process following the basic oxygen furnace cycles or continuous cycles. The gas produced per ton of liquid metal in the basic oxygen furnace is enough to produce iron as sponge iron.