The concept of producing a steel product direct from high purity sponge iron pellets necessarily implies that close attention must be paid to the purity of the concentrate; therefore, the siliceous binder (bentonite) conventionally used must be avoided. In this study, therefore, efforts are being made to find a bitumen binder which gives the high crushing strength of magnetite and hematite superconcentrate pellets, without a pre-requirement of firing at high temperatures. The effects of density of green pellets and their subsequent heat treatment conditions on their strength are described. The additional advantage of using bitumen is that it is an integral source of reducing potential which significantly contributes to the overall reduction of iron oxide in hydrogen at temperatures above 800°C. At these temperatures, the residual sulphur and carbon contents are below 0.02% and 0.07% respectively in both reduced magnetite and hematite pellets. Further, the direct reduction behaviour of these pellets was investigated in inert and reducing atmospheres with reference to temperature (400-1100°C) and type of iron oxide. This was complemented by metallography, X-ray and chemical analysis of the pellets and powder samples. In order to avoid possible error in determining the controlling mechanism during initial stages of high temperature (600-1100°C) reduction, the effect of mass transfer through an external gas film is accounted for in an overall rate expression based on the shrinking core model. The use of this equation (derived for a flat plate geometry) in analysing the initial reduction data of magnetite and hematite superconcentrate (contained in a small crucible) showed that the chemical reaction and the gas diffusion were the two major controlling factors. However, the relative contribution due to the external mass transfer was significant. At the above temperatures, the final stages of reduction were controlled by the solid state diffusion process. Below 600°C, however, the rate of reduction was dominantly chemical reaction controlled in both the initial and final stages of reduction.