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Quality Magnetite D.R.I. Fines, also called sponge iron is produced from the direct reduction of iron ore (in the form of lumps, pellets or fines) to iron by a reducing gas produced from natural gas or coal. Few ores are suitable for direct reduction. Reduced iron derives its name from the chemical change that iron ore undergoes when it is heated in a furnace at high temperatures in the presence of hydrocarbon-rich gasses. Direct reduction refers to processes which reduce iron oxides to metallic iron at temperatures below the melting point of iron. The product of such solid state processes are called direct reduced iron.