This paper describes a low shaft furnace as a new model with three capabilities for making (1) a “smart iron-manufacturing system” using scrap, (2) “co-production” of electrical power and iron, and (3) a “smart community” of new local adhesion, promotion of industry, and local supply and local consumption into a process which can respond to local demand. In this study, by the “Iron Technology and History Forum”, the iron-manufacturing experimental results using a low shaft furnace were analyzed by chemical reaction engineering, and it is presumed that transient response control of the heating rate and a partial pressure rise of CO in a low shaft furnace were key factors controlling slag and metal components.