Electric arc furnaces are used for melting high-melting-point alloys such as steels. The furnace consists of a saucer-shaped hearth of refractory material for collecting the molten metal, with refractory material lining the sides and top of the furnace. The roof can normally swing away to facilitate charging of the furnace. Two or three carbon electrodes penetrate the furnace from the roof or the sides. Doors in the side of the furnace allow removal of alloys, removal of slag and oxygen lancing.

The scrap metal charge is placed on the hearth and melted by the heat from an electric arc formed between the electrodes. In a direct-arc furnace, the electric arc comes into contact with the metal; in an indirect-arc furnace the electric arc does not actually touch the metal . Molten metal is typically drawn off through a spout by tipping the furnace.

As the refractories deteriorate, slag is generated. Fluxes such as calcium fluoride may be added to make the slag more fluid and easier to remove from the melt. Refractory life can also be extended by forming protective slag layers in the furnace, by intentional addition of silica and lime. The slag protects the molten metal from the air and extracts certain impurities.

Electric arc melting furnaces are more tolerant of dirty scrap that induction furnaces and can be used to refine metals, allowing steel to be refined from an iron charge. Direct electric-arc furnaces have a very high thermal efficiency - around 70% - and can function at as little as 450-550 kW.h/tonne of metal melted. Indirect electric arc furnaces typically achieve closer to 700-1000 kW.h/tonne of steel.