Over 0.2 million TPY (ton per year) of hazardous flyash is currently being produced by the steel industry in Taiwan, causing potential environment pollution issues. The decomposition and methanation reactions of CO₂ with flowing H₂ over oxygen-deficient recycled ferrites from steel industrial flyash (RFSIF) and nickel ferrite nanoparticles (NFNs) at 300–400 °C and 1 atm were studied and the fine structure of the Fe/Ni species in the RFSIF/NFN catalysts investigated. Experimentally, a magnetic separator was used to separate the magnetic ferrites from steel flyash with an average separation fraction of 74%. Oxygen deficiencies were created in RFSIF/NFNs by reduction with H₂. The decomposition of CO₂ into C and O₂ was achieved within a few minutes upon contact with the oxygen-deficient RFSIF/NFNs by incorporation of O₂ in the ferrites. Oxygen and carbon, rather than CO, were produced in the decomposition process. The complete decomposition of CO₂ was possible due to the high number of oxygen deficiencies in the catalysts. The Fe pre-edge XANES spectra of RFSIF/NFNs exhibited an absorbance feature at 7115 eV for the 1s-to-3d transition, forbidden by a selection rule in the case of perfect octahedral symmetry. The EXAFS data revealed that RFSIF/NFNs present two central Fe atoms coordinated primarily by oxygen with a bond distance of 1.93 ± 0.02 and a coordination number of 4.03. CH₄ was produced during the reactivation of RFSIF/NFNs with H₂. Moreover, the decomposition of CO₂ with the recovery of valuable CH₄ using waste heat from the off-gas produced in the steel industry is an appealing alternative for energy recovery. Finally, the kinetic and thermodynamic parameters of the CO₂ decomposition/methanation over RFSIF/NFNs at 300–400 °C and 1 atm were calculated using a pseudo first-order model and the Arrhenius equation, respectively.