The development of hydrogen plasma smelting reduction as a CO₂ emission-free steel-making process is a promising approach. This study presents a concept of the reduction of hematite using hydrogen thermal plasma. A laboratory scale and pilot scale hydrogen plasma smelting reduction (HPSR) process are introduced. To assess the reduction behavior of hematite, a series of experiments has been conducted and the main parameters of the reduction behavior, namely the degree of hydrogen utilization, degree of reduction and the reduction rate are discussed. The thermodynamic aspect of the hematite reduction is considered and the pertinent calculations have been carried out using FactSage^TM 7.2. The degree of hydrogen utilization and the degree of reduction were calculated using the off-gas chemical composition. The contribution of carbon, introduced from the graphite electrode, ignition pin and steel crucible, to the reduction reactions was studied. The degree of reduction of hematite, regarding H₂O, CO and CO₂ as the gaseous reduction products, is determined. It is shown that the degree of hydrogen utilization and the reduction rate were high at the beginning of the experiments, then decreased during the reduction process owing to the diminishing of iron oxide. Conducting experiments with the high basicity of slag B₂=2 led to a decrease of the phosphorus concentration in the produced iron.