A process is being developed by the Bureau of Mines to selectively recover nickel and cobalt from low-grade domestic laterites. In laboratory evaluation of the process, the oxides in th laterite were selectively reduced with carbon monoxide at temperatures from 350 deg to 600 deg c. For material containing more than about 5 percent magnesia, pyrite additions or post-reduction heat treatments were necessary to achieve satisfactory nickel and cobalt extraction for this range of reduction temperatures. Multistage leaching of the reduced material at ambient temperature and pressure in the presence of oxygen, ammonium sulfate, and ammonium hydroxide extracted up to about 90 and 85 percent of the contained nickel and cobalt, respectively. The nickel was selectively recovered from the leach solution by solvent extraction and was then stripped from the loaded organic with dilute sulfuric acid to provide a nickel-rich electrolyte. Treatment of the raffinate with hydrogen sulfide resulted in the recovery of cobalt as a sulfide. The only contaminant in solution was magnesium, which was removed by ion exchange or precipitation. In this process, the energy requirements are relatively low, and except for minor operation losses, only coke and oxygen are consumed.