First the ore is crushed, then melted, the slag (rock dust/other impurities) is skimmed off, resulting in iron.
Iron ore is just a rock -- in fact it would probably be hard to tell iron ore from a piece you found lying out in your backyard. It's what mines produce, and it needs to be burned to separate it into its different elements. Iron is an element. It is the purest form of the metal. Steel is mostly iron, but it is not pure iron. To make steel you must burn coke (another kind of rock) along with the iron ore. The coke adds carbon to the iron, producing steel which is stronger than pure iron.
Typical process: (1) Blast the ore and remove it from the ground. (2) Grind it to powder in huge mills (or mix with water and grind to mud in a wet process) (3) Separate it from contaminants using magnetic separation (for magnetite) or a process called froth flotation (for hematite). (4) Settle it and decant off most of the water. Filter off the rest of the water. (5) Pelletize the concentrate on pelletizing disks or in pelletizing drums to make grape-sized balls. (6) Roast the pellets to harden them and dry away residual water. (7) Transport to a smelter where one typically uses a blast furnace or arc furnace. Carbon (coke) is added along with a silica flux. The coke combines with the oxygen in the ore leaving metallic iron, and other impurities combine with the silica to form slag.
