Abstract: A method and apparatus for the direct reduction of iron in which a fossil fuel is gasified to produce a hot gas which is tempered with a carbon dioxide lean gas. The mixture is reacted with carbon to upgrade it in reducing potential and is desulfurized by reaction with lime in a first shaft furnace to form a hot reducing gas. The hot reducing gas is utilized as the reductant in a counterflow shaft reduction furnace and the spent reducing gas is recycled as tempering gas for the gas from the hot gasifier. The apparatus includes a gasifier, counterflow shaft gas reactor, a shaft type direct reduction furnace and associated equipment.