This paper introduces a new coal-based rotary kiln process of DRI production - the CRIMM process, which is developed by Changsha Research Institute of Mining and Metallurgy in the past years. Its main features are the use of composite pellets (in rotary kiln). The process consists of preparation of pellets from iron concentrate and coating of coal on their surfaces. The new process is able to overcome a series of defects of the conventional coal-based rotary kiln processes. A continuous test was conducted using an experiment rotary kiln (-0.6;, x 3 m). TFe of the magnetic iron concentrate used in the test is 67.25 per cent. TFe of the product DRI is 88.54 per cent, MFe is 84.11 per cent, S and P are less than 0.02 per cent. The metallisation ratio of pellet is 95 per cent. The pellet power ratio is less than 0.3 per cent. The utilisation coefficient of rotary kiln is 1.3 t/m'-d. The overall recovery of iron concentrates is 99.7 per cent. Two small industrial plants using the CRIMM process are being set up in China. Their coal consumption can be decreased to 520 kg standard coal per ton DRI respectively.