Sponge iron is the product created when iron ore is reduced to metallic iron, usually with some kind of carbon (charcoal, etc), at temperatures below the melting point of iron. A spongy mass results (sometimes called a bloom), consisting of a mix of incandescent wrought iron and slag.

The sponge would then be removed from the furnace in which it was created and repeatedly beaten with heavy hammers and folded over to remove the slag, oxidise any carbon or carbide and weld the wrought iron together. This treatment would usually create a wrought iron with about 3 percent slag and a fraction of a percent of other impurities. Further treatment could add back in controlled amounts of carbon, allowing various kinds of heat treatment (e.g. "steeling").

This was the first way iron was first made in the Middle East, Egypt, and Europe. The advantage of the technique was the lower furnace heat required to make the iron, only about 1000 K or so. The disadvantage, relative to the manufacture of cast iron, is that only small quantities can be made at a time.