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To optimize the process and improve the degree of reduction, a two-stage experiment was designed. It was carried out in a micro-fluidized bed. It is operated as a differential reactor to ensure every particle in the micro-fluidized bed is at equal temperature, concentration and residence time. The experiment used iron ore powder from Yangdi. The reducing gas and temperature in the pre-reduction stage were, respectively, pure CO and 625 °C. In the final reduction stage, the temperature and reducing gas were, respectively, 800 °C and pure CO. The residence time was between 10 min and 60 min. In addition to the experiment, a microscopic technique was also carried out. The test shows a significant influence of the temperature and residence time of the two-step experiment on the final reduction degree.