Smelting converts a metal oxide ore to the metal. The output is typically a standard-sized metal bar. It requires substantial thermal energy, and often some chemical input such as carbon monoxide (made from charcoal or coke on Earth, but coke is not readily produced on Mars) or hydrogen. Mars has abundant iron oxides and even more aluminum oxides, and it's possible (though by no means certain) that good quality ores of other metals (e.g. copper oxide) may be found. The problem is not the oxide itself, but its dilution in other minerals. What is needed are areas where the oxides are concentrated. Considerable separation of the desired ore from other Martian regolith constituents will generally be required before it is suitable as smelter input.
If a suitable native source of carbon can be found, or if a hydrogen rather than a carbon based reduction process can be created, small-scale smelting of iron ore requires only other small-scale crafts for its equipment and raw materials (brick-making for the furnace). It thus qualifies as a small-scale craft, suitable for a frontier town (small and largely self-sufficient) economy. The bars produced by smelting are the raw materials of the blacksmith. Alternatively, meteoric iron may be available, in which case small-scale iron smelting is not required, only the melting of the iron and casting into bars.