Fly ash particles from the combustion of solid-fuels together with disintegrated particles arising from iron-ore pellets result in accumulation of deposits on the refractory linings of the grate-kiln induration machine during the iron-ore pelletizing process. The deposits amass in the high-temperature regions of the induration furnace thus disturbing the flow of gas and pellets. Therefore, to tackle the above-mentioned issues, an understanding of deposit formation mechanism is of crucial importance. This study was conducted with the objective of addressing the effect of disintegrated iron-ore pellet dust on deposit formation and the mechanisms behind deposition (slagging) in the grate-kiln process. A comprehensive set of experiments was conducted in a 0.4 MW pilot-scale pulverized-coal- fired furnace where three different scenarios were considered as follows; Case 1 (reference case): Coal was combusted without the presence of pellet dust. Case 2: Natural gas was combusted together with simultaneous addition of pellet dust to the gas stream. Case 3: Coal was combusted together with the addition of pellet dust simulating the situation in the large-scale setup. Fly ash particles and short-term deposits were characterized and deposition was addressed in Part I of this study. In light of the experimental observations (Part I) and the thermochemical equilibrium calculations (Part II), a scheme of ash transformation during the iron-ore pelletizing process was proposed. The dissolution of hematite particles into the Ca-rich-aluminosilicate melt (from the coal-ash constituents) decreased the viscosity and resulted in the formation of stronger (heavily sintered) deposits. Overall, this pilot-scale work forms part of a wider study which aims at deepening the understanding of ash transformation phenomena during the large-scale pelletizing process.