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The hydrophilic initiator potassium persulfate (KPS) was converted into a hydrophobic molecule by complexing with cetyltrimethylammonium bromide (CTAB) at both ends of the molecule (CTAPSu). Inverse emulsion polymerization thus proceeded inside micelles dispersed in the affluent toluene with CTAPSu as the initiator. Polyaniline (PANI) formed inside the micelles and entangled with Fe₃O₄ nanoparticles already esterified with oleic acid (OA). Iron composites consisted of OA-esterified Fe₃O₄ nanoparticles covered with PANI after de-emulsification. After calcination at 950 °C in an argon atmosphere, the resultant iron compound was a mixture of α-Fe (ferrite) and Fe₃C (cementite), as determined by X-ray diffraction. Eventually, the calcined iron compounds (mixtures) demonstrated superparamagnetic properties with a high saturation magnetization (Ms) of 197 emu/g, which decayed to 160 emu/g after exposure to the atmosphere for four months.