To counteract the rising greenhouse gas emissions, mainly CO2, the European steel industry needs to restructure the current process route for steel production. Globally, the blast furnace and the subsequent basic oxygen furnace are used in 73% of crude steel production, with a CO2 footprint of roughly 1.8 t CO2 per ton of produced steel. Hydrogen Plasma Smelting Reduction (HPSR) utilizes excited hydrogen states with the highest reduction potentials to combine the simultaneous reduction and smelting of iron ore fines. Due to the wide range of iron ore grades available worldwide, a series of hydrogen plasma experiments were conducted to determine how pre-reduced iron ore and iron-containing residues affect reduction behavior, hydrogen consumption, overall process time, and metal phase microstructure. It was discovered that, during the pre-melting phase under pure argon, wet ore increased electrode consumption and hematite achieved higher reduction levels, due to thermal decomposition. The reduction of magnetite ore yielded the highest reduction rate and subsequent hydrogen conversion rates. Both hematite and magnetite exhibited high utilization rates at first, but hematite underwent a kinetic change at a reduction degree of 80–85%, causing the reduction rate to decrease. In comparison to fluidized bed technology, it is possible to use magnetite directly, and the final phase of the reduction can move along more quickly due to higher temperatures, which reduces the overall process time and raises the average hydrogen utilization. A combination of both technologies can be considered advantageous for exhaust gas recycling.