Here is some great background information we found on the internet from the University of Wisconsin Department of Engineering web site. Its a bit technical, but it really helps explain the difference between iron and steel, and how we actually get "wrought iron".
The making of iron is the most basic of the blacksmith's trade. The process of making the various kinds of iron and steel is described below. The difference between iron and steel is based on the amount of carbon contained in the metal. If less than 0.1% carbon is present in the metal, it is termed wrought iron, and it remains a ductile metal that can be heated and welded, but not hardened; it can be softened but not made fluid by an ordinary furnace, even with an intense blast. Increasing the carbon content causes the metal to develop the qualities of steel. With 0.65% carbon, the metal increases its tensile and compressive strength; it can be welded, remains ductile, can be hardened and will flow at an easily obtainable temperature. With 1% carbon, tool steel is obtained. Increasing the carbon content to 1.5% increases the hardness but the ductility and welding properties decrease. When the carbon content reaches 2% or greater, the metal loses it ductility; it cannot be welded or tempered and it is known as cast iron. The development of the process of casting iron has been considered one of the greatest technical contributions of the Middle Ages. Smiths extended their techniques of casting bronze to casting the much more abundant cast iron. The ability to cast iron made a strong and comparatively inexpensive metal available to the mass market, instead of the more expensive wrought iron and crucible steel bars which were beaten into strips and laminated into tools and weapons.
The process of making iron begins with the preparation of the metallic ore. The first stage begins in the mine itself as the metallic ores are separated from the non-metallic earth and stones. The metallic ores are then removed from the mine and crushed into manageable pieces. The ore is crushed on a heavy stone pavement with a long-handled hammer or a heavy stone. After crushing the hard ores are often roasted, sometimes two or three times.
Roasting ore serves two purposes. First, it softens hard ores, making them more easily broken or crushed, which helps the melting process. Secondly, roasting reduces the sulfur content of ores, which is harmful to the iron-making process. Roasting of ore can be done in several different ways: in heaps, stalls or kilns. Heap roasting with coal is done in the following manner. The ore is broken into pieces weighing 3-5 kg and placed on a sloping bed of coal 7 m long, 2.5 m long, and 15 cm deep. The ore is heaped 1 m high in the center and is covered in coal dust and ashes and then the heap is ignited. The ratio of coal to ore is 150-200 kg per ton. The roasting can take over 15 days.
Roasting stalls consist of square areas dug out of the earth and lined on three sides with stone or brick walls in order to retain the heat more effectively. The roasting of ore in stalls consumes 50-150 kg of charcoal per ton of ore, and can accommodate up to 300-350 tons of ore. The ore is laid down in alternately layers with charcoal and wood to a height of 2.5 to 3 m. A layer of fine sand of the same ore is spread over the pile and pounded into it to keep it from collapsing before it has been roasted.
Roasting ore in kilns is the most efficient method. A rectangular roasting kiln is typically 3 to 4 m high, 4.5 m long and 2 m wide. The kiln is filled with alternating layers of charcoal and ore. The ore is broken down as small as 12 mm and placed in layers 60 cm deep; the layers of charcoal are 30 cm deep. The kiln consumed 50-100 kg of fuel per ton of ore and was capable of an output of 15-30 tons of roasted ore per day.
After the ore has been roasted, it is crushed or ground to a fine sand. The tools for crushing and grinding ore range from simple hand tools to elaborate water- or steam-powered stamping mills or grinding wheels. A detailed description of many types of crushing and grinding machinery used in the 1500's can be found in Agricola's De Re Metallica. The type of machinery used will be dependent on the scale of the mining operation. After the ore is crushed or ground it is washed to decrease the silica and alumina content. As with the crushing machinery, the machinery for washing ores can be simple or elaborate.
At this point the ore is ready for smelting. There is a tremendous variety in the number of different types of furnaces to smelt iron (and other metals). Details for constructing a furnace are not considered here-the reader should consult De Re Metallica or a good text on the history of metallurgy for specific details. Whether the iron ore was smelted in open hearths or in small or large blast furnaces, the product was wrought iron. Iron was produced by direct reduction of the iron oxide into iron metal. Despite the fact that iron has a melting point of 1540 degrees C, iron oxide can be reduced to metal at 800 degrees C. At a temperature of 1100-1500 degrees C, the reduced iron flows together forming a semi-fused porous mass called a bloom. A slag forms during this process, some of which is trapped in the semi-porous bloom. The bloom is hammered while glowing hot to force out the slag and at to shape and form the iron into a usable form. Producing iron by this method is rather inefficient. The yield from the best ore rarely exceeds 50% of the iron found in the ore. Ordinarily the yield is on the order of 20% and the remaining iron is lost in the slag. Iron ores range in composition, depending on where it is mined from around the world.
The reducing agent responsible for converting the iron oxide to iron metal is carbon from the charcoal used in the smelting process. Another consequence of using charcoal in the smelting process is that at smelting temperatures, carbon will migrate into the iron. If the carbon content is higher in the atmosphere or in the surrounding materials, carbon will enter and diffuse through the iron. If the carbon content is higher in the iron than in the surroundings, carbon will migrate toward the surface and out of the iron. The absorption of carbon is called carburization; the removal of carbon is called decarburization. Improved furnaces and the resulting higher temperatures introduce the problem of carburization into the iron-making process. At elevated temperatures the charcoal and its hydrocarbon gases of combustion supply excess carbon, and carburize the bloom, making it hard and unworkable. A two step process is then required; the first producing the carburized bloom and the second, a heat-treatment to decarburize the iron for proper forging. As temperatures increase even higher, the iron will actually melt, producing a molten metal which may be cast. This cast iron has a high carbon content and is therefore very hard and brittle.
To produce a malleable iron from cast iron or "pig-iron", as it is sometimes called, the cast iron is packed in crucibles containing pulverized iron ore and heated to a bright redness for many days. At elevated temperatures, the chemical affinity of oxygen for carbon is stronger than its affinity for iron. As the carbide in the iron gives up is carbon, the iron ore packed around the castings releases oxygen which combines with the freed carbon to form carbon monoxide and carbon dioxide which escape from the furnace. The decarburization process is partial to complete, depending on the thickness of the casting and on the temperature and time of heating. This process produces a metal which is almost free from carbon and provides castings possessing toughness and ductility. Depending on the final carbon content, the smith may be left with pure iron, a mild steel, or a high carbon steel.
An alternative method for producing steel, is that used historically to produce Damascus steel. Damascus steel was produced in India where it was called wootz. This steel was traded in the form of castings, cakes of metal, which were approximately the size of a hockey puck. The process began with wrought iron produced by the direct reduction of iron oxide to metal, as described above. The bloom was broken into small pieces (0.5-2.0 lb.) and placed in a clay crucible with pulverized charcoal (1/10 of the weight of the wrought iron). The crucible was sealed to prevent oxidation and then heated to approximately 1200 degrees C. At this temperature, the carbon diffuses into the iron, forming an alloy known as austenite. The addition of carbon lowers the melting point of the metal; when a "sloshing" sound is heard when the crucible is shaken, it is taken as an indication that a significant portion of the carbon has diffused into the iron. Up to 24 crucibles are heated at one time in the furnace. This process takes 2.5 to 4 hours. At this point the crucible is cooled very slowly, over a period of many days. The slow cooling produces a homogeneous distribution of 1.5 to 2 percent carbon throughout the steel. As the temperature falls below 1000 degrees C, a network of iron carbide, or cementite, forms around the austenite grains. Cementite is very hard, but also very brittle at room temperature. The resulting Damascus steel gains its legendary toughness only after forging and extensive hammering to break down the cementite network. Damascus steel is forged at temperatures between 650 degrees C and 850 degrees C, which is lower than a European smith would normally forge a lower carbon steel (<1% carbon). Hammering the steel at temperatures below 850 degrees C will break down the cementite network which causes the steel to be brittle, but leaves spheroidal particles of cementite which still function to strengthen the steel. After forging, a Damascus blade is hardened by heat treatment. By heating the blade above 727 degrees C (the temperature at which ferrite converts to austenite) and then quenching it in water or some other material, the blade is hardened. If ultrahigh-carbon steel (1-2% carbon) is allowed to cool slowly from the austenite phase, as when the wootz is first cast, the austenite is converted into pearlite: alternating layers of soft, carbon-poor ferrite and carbon-rich cementite. If the steel is quenched, however, the transformation of austenite to pearlite is suppressed and instead martensite is formed. The structure of martensite allows room for carbon atoms and so is still hard.