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The dynamic behaviour of an electrode-position control system for an industrial direct electric-arc furnace is investigated. The electrode-positioning servomechanism is modelled as an electromechanical system with transfer-function relationships and nonlinear valve characteristics defining the hydromechanical system. The electrical-power-transmission-system model is based on single-phase circuit equations and incorporates an empirical arc-discharge characteristic. A dynamic representation of the supply system is also used which incorporates a linear model of an equivalent synchronous machine including both transient and subtransient effects. Dynamic performance of the conventionally controlled system is investigated by analogue/hybrid simulation of the nonlinear-system model. Optimal and suboptimal control of a linearised model is also studied, and methods of solution based on dynamic programming and the algebraic matrix Riccati equation are compared. To investigate online calculations of optimal control, various forms of performance functional are considered. Conventional 4-mode control and linear optimal control of arc impedance are applied in real time by process computer to the analogue-simulated nonlinear-system model. The study demonstrates a relative improvement in the dynamic performance of arc current, and hence power, with changing bath conditions and varying arc-discharge characteristics.