Reduction of iron ore–coal composite pellets at a rotary hearth furnace (RHF) could be an energy efficient process under optimized design and operating conditions. The present study aims to analyze such process through process models for optimization of thermal efficiency. In the present article, a mathematical model has been described to calculate the rate parameters, evolution of various phases, temperature profile, and thermal efficiency of the process. Experiments have been carried out for reduction of iron ore–coal composite pellets in multi-layers at laboratory scale RHF. It has been observed that while the total average time of reduction for three layer bed at 1,200 °C is 48 min, the average time of reduction at 1,300 °C is estimated as 11 min only. The thermal efficiency of the process is found to be maximum for three layer bed and least for the single layer bed. Extra fuel in terms of carbon equivalent has also been reported.