Bog iron is a type of iron ore composed of mostly mineral goethite and other iron-bearing minerals with impurities like clay or plant debris.

http://picasaweb.google.com/107509377372007544953/Rocks#5854471542847046882
Bog iron is typically rust-colored and composed of limonite. It is a mixture of iron-bearing minerals, most important of them is goethite. Width of sample from Estonia is 14 cm.

It used to be a very important ore of iron before better alternatives like banded iron formations were discovered. It has no industrial significance anymore but not because its iron content is low. Bog iron may in many cases be quite rich in iron. The main problem is that it forms only a thin layer of rust-colored and porous layer at the bottom of bogs. It simply is not economical to search for such thin and laterally widespread deposits.

Bog iron is associated with bogs because bog water contains very little oxygen and can therefore hold iron. Oxygen would quickly react with iron and precipitate it as a rusty ferric iron (with an oxidation number of +3) which is insoluble in water. Iron with an oxidation number of +2 (ferrous iron) is soluble and can be held in solution by bogs. Bog iron forms if something provides oxygen. It can be oxygenated ground water, for example¹.

This mineral resource is associated with northern latitudes where peat bogs are widespread. Such areas are Scandinavia in Europe, and extensive areas in northern Russia and Canada.

http://picasaweb.google.com/107509377372007544953/Rocks#5854471532647116290
Bog iron is not massive. It contains lots of pores and its density is lower than one would assume from an iron ore. Width of sample from Estonia is 12 cm.
http://picasaweb.google.com/107509377372007544953/Rocks#5854471542965091826
Width of sample from Russia is 13 cm.

References

1. Robb, L. (2005). Introduction to Ore-Forming Processes. Blackwell Science Ltd.