Abstract: Nickeliferous laterite ore was first treated by a deep reduction process with coal as reductant and calcium oxide as flux under fractional smelting conditions, then followed by magnetic separation for recovery of nickel and iron. Optimal reduction conditions were 1300°C for 120min at coal blending ratio 2:1. The main performance indices of the process were 5.01% nickel grade, 22.46% iron grade, and metal recovery of nickel and iron at 96.05 and 79.69%, respectively. Various characteristics of the reduction materials were investigated. It's indicated that metallic nickel and iron were eutectic. An increase in reduction temperature accelerated aggregation of the nickel and iron metal phase and increasing reduction time contributed to growth of metallic particles, thus making magnetic separation much easier.