There is a very large amount of iron oxide on the surface of Mars within easy reach (once you are there of course).
What would be the practical challenges to collecting this and turning it into usable Iron? What would be the most straight-forward process to implement for a Martian colony, and what kind of energy per kg of product would be needed?
Useable Iron is not pure metallic iron, it is iron with the right amount of carbon. Too few carbon and the iron is too soft, too much and the iron is too hard and brittle.
A little bit of other metalls like manganese (the most common one), nickel, chromium, molybdenum, vanadium, silicon, and boron. Less common alloyants include aluminium, cobalt, copper, cerium, niobium, titanium, tungsten, tin, zinc, lead, and zirconium. To much sulfur could be bad.
It depends on the application what alloys are needed, there is no universal alloy useful for all applications. As John Custer wrote, there are some alloys covering a broad range of uses.
The same is true for aluminum, pure alumin is weak too.
As other answers here have noted, simply splitting the oxygen from the iron doesn't produce USABLE iron - for that, you need carbon content. I'm sure there are other workable approaches to this, but here's one:
To get elemental iron:
To get elemental carbon:
Combine the two in proper measures, and melt it. As others have noted here, you'll need nuclear power for more than one part of this process.
This is a worst case scenario, of course - you might be able to find ore with significant carbon content in the first place. This papers over a lot of the details of the iron separation that are covered in the linked paper, but it's a broad back of the envelope approach that I think is workable.
No known planet besides Earth has both oxygen and fossil fuels for energy, and so Mars will need either something on the order of electrical solar cells or nuclear for energy. If you are talking nuclear, you will need to find viable uranium and thorium ores, use some sort of energy reserves to purify it, and then that could be the starting point for more energy sources for building solar cells or mining and purifying more uranium ores.
At some point this energy could be used to melt part of the polar ice caps for cooling of the reactors, and the filling and warming of large insulated chambers and caverns with water and carbon dioxide for food. As for lighting for plants, it is not obvious whether artificial lighting of an area insulated from the cold Martian environment might be better than trying to create something transparent for solar input but still capable of insulating from the extreme cold of Mars. Probably some of the direct heat from the rods could be sent to an alternate high temperature chamber for metallurgy, but it is not obvious whether something like electrolysis for aluminum might be better anyway.
On Earth, the most standard way of reducing iron involves fossil fuels and oxygen.
On another planet, where those are not available, it is not impossible that reducing other metals might potentially be more favorable because of alternate methods being needed.
It is not obvious whether the Moon or an asteroid like Ceres or something like Phobos could be better than Mars because of the lower gravity wells, or Mercury because of the solar inputs. As for Venus, I have read about the possibility of floating balloons very high in the atmosphere where the atmospheric pressure is more similar to Earth, filled with oxygen as a lift gas, but I would be averse to falling from the balloon.
Mars however is very high on the list for livability behind Earth, either for robots, humans, or genetically engineered intelligent organisms designed to withstand the vacuum of space.
Ignoring the issue of getting specific alloys, as that is a hard question common to all answers so far given, and outside my knowledge...
What you want to use is this: https://en.m.wikipedia.org/wiki/FFC_Cambridge_process
Electrolyse the iron oxide ore on a liquid salt bath. Advantages of lower working temperatures than a smelter (900c Vs 1200c), no need to deal with hydrogen (outgassing, explosion risk), avoids requirement to capture the steam produced by hydrogen reduction. No need to extract hydrogen from water.
Heck, consider - the Sabatier process for making methane from CO2 doesn't yield sufficient oxygen to burn the methane. Why waste hydrogen on producing iron, when you can turn your iron production into part of your manufacturing process to get home?
The heat of formation of iron oxide from the elements is approximately -825kJ/mol, with each mole being about 160 g of iron (III) oxide.
https://janaf.nist.gov/tables/Fe-030.html
2 Fe + 3/2 O2 -> Fe2O3
So the reverse reaction produces 1.5 moles of oxygen gas from 160g of iron oxide, which is about 48g of oxygen.
Any process that takes iron oxide and produces elemental iron and oxygen from it, must pay at least this energy expenditure. The decomposition temperature of iron oxide is about 1539C, so thermal losses would be a big factor in any furnace that seeks to separate iron oxide into its constituent elements.
Alloying the iron you produce is a small concern, the alloying constitutents are usually of such small quantities that you can bring them from Earth if they can not be conveniently produced on site.
