I've tried to make ferrofluid a few times, and there's a few things that I've ran into problems with using these ingredients. Firstly, the hematite comes from stepped down Iron3Cl. You have to reduce it to Iron2Cl. Another issue is that the layers don't separate into distinct species. When I do the experiment i find that you need to have a large amount of iron particles in the solution, i.e my thoughts are that we need to have a super saturated solution. The next time I do this I'm going to try and heat the solution sllllllooooowwwwllly and add everything over the course of a few hours. In this time I'm hoping to get a super saturated iron2cl solution.