Modelling of the three phase electric arc furnace and its voltage flicker mitigation is the purpose of this paper. The arc furnace model is implemented referring to an actual electric plant installed in Mobarakeh, Isfahan, Iran. For modelling of the electric arc furnace, at first, the arc is modeled using current-voltage characteristics of a real arc, i.e., the arc current samples as inputs and their corresponding voltages as outputs in the equivalent circuit of the furnace and its supply system. Then, the arc random characteristic has been taken into account by modulating the ac voltage by a band limited white noise. Electric arc furnace compensation with static VAr compensator, Thyristor controlled reactor combined with a fixed capacitor bank (TCR/FC), is discussed for closed loop control of the compensator. Instantaneous flicker sensation curves, before and after accomplishing compensation, are measured based on IEC standard. In closed loop control, two different approaches are considered; the former is based on voltage regulation at the point of common coupling (PCC) and the later is based on enhancement of power factor at PCC. A new method for controlling TCR/FC compensator is proposed. This method is based on applying a predictive method with closed loop control of the TCR/FC. In this method, by using the previous samples of the load reactive power, the future values of the load reactive power are predicted in order to consider the time delay in compensator control. I.