The steam-iron process is one of the oldest methods of producing hydrogen. It is a cyclic process for water cleavage, whereby coal is consumed. Coal is gassified to a lean reducing gas, containing carbon monoxide and hydrogen. This gas reacts with iron oxides (haematite Fe2O3, magnetite Fe3O4, wuestite FeO) to produce a reduced form of iron oxide (wuestite FeO, iron Fe). The reduced iron oxide is re-oxidised with steam to form magnetite and hydrogen. After studies concerning theoretical limitations, the subsequent practical realisation by construction of a suitable laboratory prototype reactor was performed. Further, the investigation and optimisation of process variables, accompanied by respective chemical analyses, and finally the simulation of the whole process and the design of a demonstration plant for electricity generation system in the range of 10 MW were carried out. The resulting overall efficiency (heat and electricity) of the respective power plant was calculated as 35% and the electrical efficiency at about 25%. The operation of the small scale "Sponge Iron Reactor" (SIR) showed that the hydrogen produced is sufficiently pure for use in any kind of fuel cell (CO < 10 ppm).