In the early to mid-1850s, the American inventor William Kelly experimented with a method similar to the Bessemer process. Wagner
writes that Kelly may have been inspired by techniques introduced by Chinese ironworkers hired by Kelly in 1854. The claim that both Kelly and Bessemer invented the same process remains controversial.  When Bessemers patent for the process was reported by Scientific American, Kelly responded by writing a letter to the magazine. In the letter, Kelly states that he had previously experimented with the process and claimed that Bessemer knew of Kellys discovery. He wrote that "I have reason to believe my discovery was known in England three or four years ago, as a number of English puddlers visited this place to see my new process. Several of them have since returned to England and may have spoken of my invention there." It is suggested Kellys process was less developed and less successful than Bessemers process.
Sir Henry Bessemer described the origin of his invention in his autobiography written in 1890. During the outbreak of the Crimean War, many English industrialists and inventors became interested in military technology. According to Bessemer, his invention was inspired by a conversation with Napoleon III in 1854 pertaining to the steel required for better artillery. Bessemer claimed that it "was the spark which kindled one of the greatest revolutions that the present century had to record, for during my solitary ride in a cab that night from Vincennes to Paris, I made up my mind to try what I could to improve the quality of iron in the manufacture of guns." At the time, steel was used to make only small items like cutlery and tools, but was too expensive for cannons. Starting in January 1855, he began working on a way to produce steel in the massive quantities required for artillery and by October he filed his first patent related to the Bessemer process. He patented the method a year later in 1856.  William Kelley was awarded priority patent in 1857.
Bessemer licensed the patent for his process to four ironmasters, for a total of £27,000, but the licensees failed to produce the quality of steel he had promised—it was "rotten hot and rotten cold", according to his friend, William Clay—and he later bought them back for £32,500. His plan had been to offer the licenses to one company in each of several geographic areas, at a royalty price per ton that included a lower rate on a proportion of their output in order to encourage production, but not so large a proportion that they might decide to reduce their selling prices. By this method he hoped to cause the new process to gain in standing and market share.
He realised that the technical problem was due to impurities in the iron and concluded that the solution lay in knowing when to turn off the flow of air in his process so that the impurities were burned off but just the right amount of carbon remained. However, despite spending tens of thousands of pounds on experiments, he could not find the answer. Certain grades of steel are sensitive to the 78% nitrogen which was part of the air blast passing through the steel.
The solution was first discovered by English metallurgist Robert Forester Mushet, who had carried out thousands of experiments in the Forest of Dean. His method was to first burn off, as far as possible, all the impurities and carbon, then reintroduce carbon and manganese by adding an exact amount of spiegeleisen, an alloy of iron and manganese with trace amounts of carbon and silicon. This had the effect of improving the quality of the finished product, increasing its malleability—its ability to withstand rolling and forging at high temperatures and making it more suitable for a vast array of uses. Mushets patent ultimately lapsed due to Mushets inability to pay the patent fees and was acquired by Bessemer. Bessemer earned over 5 million dollars in royalties from the patents.
The first company to license the process was the Manchester firm of W & J Galloway, and they did so before Bessemer announced it at Cheltenham in 1856. They are not included in his list of the four to whom he refunded the license fees. However, they subsequently rescinded their license in 1858 in return for the opportunity to invest in a partnership with Bessemer and others. This partnership began to manufacture steel in Sheffield from 1858, initially using imported charcoal pig iron from Sweden. This was the first commercial production.
A 20% share in the Bessemer patent was also purchased for use in Sweden and Norway by Swedish trader and Consul Göran Fredrik Göransson during a visit to London in 1857. During the first half of 1858, Göransson, together with a small group of engineers, experimented with the Bessemer process at Edsken near Hofors, Sweden before he finally succeeded. Later in 1858 he again met with Henry Bessemer in London, managed to convince him of his success with the process, and negotiated the right to sell his steel in England. Production continued in Edsken, but it was far too small for the industrial-scale production needed. In 1862 Göransson built a new factory for his Högbo Iron and Steel Works company on the shore of Lake Storsjön, where the town of Sandviken was founded. The company was renamed Sandviken's Ironworks, continued to grow and eventually became Sandvik in the 1970s.