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Iron is hard and brittle, and cannot be sharpened and used for knives, needles, files, and other tools. When shaped on a grinding wheel, no sparks are generated, only tiny red balls of hot particles. 

If the heart of an enemy warrior, or the heart of a lion, is thrown into the molten iron, it becomes very different with this addition of a life substance, and is transformed into steel.

Now, when shaped on a grinding wheel, brilliant sparks fly.  When heated red hot and allowed to cool, the steel becomes malleable and can be formed, sharpened, and polished.  When tempered, that is, heated white hot and plunged into a cooling liquid, the steel holds its edge and can cut out the heart of a lion.

Of course, any organic material can be used, and we no longer need to kill enemies or lions to magically transform iron into steel.