You can use a high energy ball mill to reduce the size of coarse iron particulates...

But iron powder of high purity is available readily.. see the below link...

http://www.sigmaaldrich.com/catalog/product/aldrich/267953?lang=en®ion=IN

Best option is the carbonyl route. See. Randall M. German. Powder Metallurgy Science, MPIF 2ND Ed. 1994. Page 96

Do you have any quantitative specification for the desired size and purity?

Weather it is a micro powder or nano powder...

If you require a small particle size carbonyl powders are best /smallest you can find. The best alternative I would suggest, but you will not find companies selling these, is inert gas condensation.

If you require a small grain size but don't care much about the particle size then ball milling is your winning choice. It's tricky due to contamination from atmosphere around the powders and milling aids and the parameters to set are many. On the good side there is a lot of literature on ball milled pure iron so you can have fun reading it or contacting directly who has already attempted it.

Try for hydrometallurgy route...

Yes I completely agree with Prof. Anand Pai Sir