A method and apparatus is disclosed for indirectly drying and preheating fine material, in particular, moisture containing coal or the like, comprises, providing a rotary drum which is mounted for rotation and has a plurality of heating tubes extending therethrough, supplying heated cooling gas from a dry coke cooling system to the heating tubes, supplying the moist material to the drum, adjacent the bottom thereof, removing the material from the drum after it has been predried and preheated, and returning or recycling a portion of the predried and preheated material to the rotary drum. The method and apparatus utilizes the heated cooling gas used to cool dry coke in a dry coke cooling plant from high temperatures to below 200.degree. C. It has been found that such heated cooling gas for a selected amount of dry coke is useful either in a series of more than one rotary drum or, to process moist material in a single drum and also generate steam as a byproduct.