Red mud, an insoluble residue produced during alkali leaching of bauxite, is considered as a low-grade iron ore containing 30% to 50% iron. The present paper deals with the use of thermal plasma technology for producing pig iron from red mud waste fines. The smelting reduction of red mud was carried out in a 35 kW DC extended arc thermal plasma reactor. Red mud was properly mixed with fluxes and graphite (fixed carbon, 99%) as a reductant as per stoichiometric requirement. The effect of various process parameters like a reductant, fluxes and smelting time on iron recovery was studied and optimized. An optimum condition for the maximum recovery of iron was obtained. A new thermal plasma process applicable to direct iron making from red mud waste fines that would achieve significant utilization of red mud was proposed.