Composite pellets utilizing iron and carbon bearing process waste materials obtained from the integrated steel mill was reduced in a simulated RHF (rotary hearth furnace) reactor at 1523 K and 1573 K to produce DRI (direct reduced iron) pellets with sufficient size, reduction degree, compression strength, and zinc removal as an iron and carbon substitute for the blast furnace. To obtain DRI sizes of more than 4.75 mm, bursting tests of composite green pellets with moisture were done and found to be dependent on the water content and initial charging temperature into the RHF. Bursting of composite green pellets with water content was dependent on the charging temperature. At a charging temperature of 1273 K and 1473 K, water content at 1 mass% and above resulted in pellet bursting, but at 1073 K, water content only above 5 mass% resulted in appreciable pellet bursting. The compressive strength at various temperatures showed composite pellets containing carbon of 5.3 mass% can achieve blast furnace useable DRI at reduction temperatures of higher than 1473 K, but composite pellets containing carbon of 8.3 mass% required reduction temperatures higher than 1573 K. Optimum carbon of the composite seems to be at 9 mass% with a residual carbon content of less than 1 mass%, which results in a reduction of 80–90% with a compression strength of above 120 kg. This optimum condition has also shown Zn removal for the DRI to be above 85%. Higher (%C)/(%VM) showed lower reduction degrees indicating that increased volatile matter from the carbon source aided in higher reduction.