Detailed simulations of industrial‐scale fluidized beds such as the FINEX process are still unfeasible due to the wide range of spatial scales. Due to the computational limitations it is common to apply coarse grids, which do not resolve all relevant structures. In our previous study (Schneiderbauer, AIChE J. 2017, 63, 3562), we have presented subgrid models, which enable the coarse grid simulation of dense large‐scale gas–solid flows. Herein, these corrections are applied to a parcel‐based the dense discrete phase model (DDPM), allowing to study the hydrodynamics of the FINEX process. Furthermore, the parcel approach is augmented by an unreacted shrinking core model (USCM) to account for the direct reduction of the iron ore particles by the reducing agents of H2 and CO. This DDPM model is tested first for a cold pilot‐scale fluidized bed, and second, the USCM approach is validated for the direct reduction in a lab‐scale fluidized bed. Finally, the model is applied to the FINEX process. The results show fairly good agreement with measurements of the average bed voidage and with experimentally determined particle size distributions. The results further indicate that fines are immediately reduced, whereas the reduction of the largest ore grains takes considerably longer.