A method of particulate-carbon recovery from the product gas in a coal gasification process of the type using water-carbon slurry combusted with oxygen in a reactor uses water scrubbing for the product gas to obtain particulate carbon together with ash. Certain ash content is trapped in carbon particles which have a tendency of lumping together. The carbon and ash fraction is treated with liquid hydrocarbon for carbon particle wetting and facilitating separation of ash. The recovered carbon is ground to break down bigger carbon particles and sent through a wet-particle separator; carbon particles which pass a predetermined mesh size, e.g., approximately 63 micron mesh, are sent back to the reactor for mixing with the water-carbon slurry inlet for further combustion. The bigger fractions of carbon are either ground down to size again, or diverted for other uses. Recycling carbon particles which pass a 63 micron mesh and are almost devoid of ash improves the carbon utilization and significantly reduces total ash formed. The abrasion damage on components because of ash is also reduced.