The ever-increasing demand for steel and the subsequent depletion of high-grade ores requires the massive utilization of low-grade iron ores. In the present study, an iron ore slime sample containing 56.1% Fe was investigated using physical beneficiation, carbothermal reduction, and a microwave-assisted process; however, physical beneficiation and microwave exposure were found to be inefficient as they yielded lower iron recovery. Using coconut shell as an alternative reductant was found to be promising and does not lead to the formation of higher iron oxides, such as fayalite and wustite phases. The microwave-assisted carbothermal reduction was found at par with conventional reduction, saving time and heating. The optimum magnetic concentrate obtained in both carbothermal reduction routes (microwave and muffle furnace: Fe grade, Fe recovery, and yield of 64.3, 97, and 84%, and 67, 99, and 83%, respectively) are suitable for alternative iron-making or blast furnace units.