The present work demonstrates a sustainable approach of using relatively coarser iron ore particles for ironmaking. The motivation is to reduce the energy consumption in the milling of the iron ore by utilizing coarser iron ore particles (+0.05 mm) and to select a suitable binder for improving pellet properties. Iron ore fines in the range of 0.05–0.25 mm was selected and classified into three size ranges. Fluxed iron ore pellets were prepared using lime as a binder for the basicity of 0, 1, and 2. Reduction of these pellets with a packed bed of coal fines was performed in the temperature range of 900–1200 °C for a duration of 30–120 min. The direct reduction kinetics of the iron ore pellets were studied by employing diffusion and chemical reaction control models to the experimental data. The results show that pellets made with coarser iron ore particles have improved reduction behavior and kinetics. The reduction reaction is found to be a mixed control. The activation energy for the reduction reaction varies from 44.3 to 74.76 kJ mol−1 as iron ore particle size decreases from 0.25 to 0.05 mm and basicity increases from 0 to 2.