During stainless steel production in an electric arc furnace, the dust generated amounts to around 1% of the charge weight. This dust contains chromium, zinc and other heavy metal oxides; therefore, its final disposal in special landfill sites is expensive. On the other hand, the content of chromium oxide (similar to 9 wt%), nickel oxide (similar to 2.5 wt%) and iron oxides (similar to 47 wt%) can be recovered by reduction with carbon or Fe-Si. In this paper, the dust was physically and chemically characterised, and used in the manufacture of composite pellets with carbon and Fe-Si. These pellets were added to iron-carbon melts at a temperature around 1600 degrees C. After smelting-reduction, the recovery yields of Cr, Ni, and Fe were determined. These yields were: (i) with Fe-75% Si as reductant - Ni similar to 90%, Cr similar to 90%, Fe similar to 90%; and (ii) with coal as reductant -Ni similar to 12%, Cr similar to 35%, Fe similar to 90%). A preliminary economic evaluation for Brazilian conditions showed that the process is sustainable depending on the landfill cost for dusts and the availability of inexpensive Fe-Si. When coal is used as reductant, the electric energy becomes the main cost component and the above recycling process becomes economically feasible with landfill costs higher than US$ 150 t(-1). (C) 2005 Institute of Materials, Minerals and Mining and Australasian Institute of Mining and Metallurgy. Published by Maney on behalf of the Institutes.