High-quality coking coals all over the world are gradually approaching extinction. These days, steel industries are trying to focus more on the utilisation of non-coking grades of coal. The present work involving high-ash, high-volatile lignite coal can be used indirectly in iron-making processes. Direct use is not possible due to low amount of carbon and high value of ash. High ash content leads to huge sulphur content, and this leads to high cost involvement in secondary processes. On the other hand, huge amount of iron ore fines are generated during mechanised mining, sizing, screening, transportation, beneficiation and sintering processes. Iron ore nuggets are formed from inferior quality iron ore fines using suitable binders with the applied pressure. Mechanical properties of iron ore nuggets are also assessed through shatter and abrasion test. A furnace was designed, to indirectly utilise high-ash, high-volatile lignite coal, for pre-reduction iron ore nuggets. Iron ore nuggets were partly reduced by CO, H 2 and fine carbon produced from volatilisation of coal. Optimized pre-reduced nuggets, having high mechanical stability was directly charge in the raising hearth furnace for pig iron production.