Iron ore is found by a hero that has the profession of Miner or can be bought at the Battleship's store. Iron ore can be turned into an Iron bar by the Crafting Ability "Generate Heat". Smelting requires a high crafting level in order to have a decent success rate; on lower levels of crafting, smelting generally fails and also the iron ore will be destroyed. The Attribute Luck which only marines have, increases the success rate of smelting Iron ore considerably.
There are no other uses for Iron ore other than to smelt it to become an Iron bar