MillScale is a waste cum by-product obtained during hot rolling process. Millscale consists of iron and its oxides. This study shows the condition of mill scale reduction, a by-product of iron and steel formed during hot rolling of steels, with low grade coal to produce iron powder. In this paper an attempt has been made to study of effect of addition of calcium carbonate on reduction behavior of millscale. The reduction was carried out at 900̊C for 90 minutes with varying amount of Calcium Carbonate powder (reducing atmosphere). An elaborated thermal and reduction kinetics were understood for the reduction temperature Simple XRD and degree of reduction was calculated. It was found out that with addition of calcium carbonate reduction increases upto a limit and then decreases. The maximum iron content was found in sample containing 10% by weight calcium carbonate of mill scale.