Leaching, roasting and carbonization pre-treatments were applied to sugarcane straw residue in order to modify its physicochemical properties and transform it into a bio-coal. Straw was chopped and washed with tap water (20°C, soak 24 hours, stirring 30 minutes, concentration 6.67%). The washed straw was roasted at 270°C for 20 minutes in a reactor, at atmospheric pressure with limited oxygen. Then, the roasted material was charred at 600°C for 90 minutes. The bio-coal obtained has 66.54% of fixed carbon, 0.27% of sulfur, 34.33 MJ/kg of higher heating value (values measured on a dry basis), and O/C and H/C ratios of 0.08 and 0.49 respectively, resembling a mineral coal, with suitable characteristics for its use as a fuel and reducing agent in iron ore direct reduction processes to produce sponge iron. Furthermore, the product is friable, hydrophobic and resistant to biodegradation.