Shredded hard coal (grain size 0.1-0.25 mm, S content 3.16% by mass) was oxidized with a mixt. of steam and air (steam content 4-70% by vol.) at 350-500 degrees C, contact time 5-60 min and coal-to-oxidant ratio 3.0-12.8 m(3)/(h.kg) to obtain pulverized fuel under lab. conditions. The optimal temp. was 430 degrees C, contact time 15 min, coal to oxidant ratio 5.1 m(3)/(h.kg) and steam content in the mixt. 47% by vol. S content in obtained fuel was <1.5% by mass.