An improved industrial process and apparatus are provided for producing chlorine and iron oxide in a multi-stage recirculating-fluidized-bed reactor wherein ferric chloride in the vapor phase is reacted with an excess of oxygen at temperatures from 550.degree. to 800.degree. C. The improvement comprises utilizing a reactor that includes an initial "dense" zone and a downstream "dilute" zone. In the dense zone, a fuel is burned, reactants and recirculated iron oxide particles are heated, ferric chloride is vaporized and at least 50% of the ferric chloride is converted to chlorine and iron oxide. A solids volume fraction from 0.3 to 0.6 and a superficial gas velocity from 0.15 to 0.6 meters/second are maintained in the dense zone. In the downstream dilute zone, a solids fraction from 0.005 to 0.05 is maintained, along with a superficial gas velocity from 1.5 to 6 meters/second which is from 5 to 25 times the superficial gas velocity in the dense zone, and the conversion of ferric chloride is continued to greater than 95% completion.