The first non-indigenous explorer to document the place was Edward John Eyre, during an expedition in 1839 to map the region. He passed through the area several times before making a written record of it in his notes, after climbing one of the hills and commenting on the ironstone abundant there. In 1854 the land was purchased initially as a pastoral lease, for the purpose of grazing sheep for their wool. The property was named 'Koroona hill', but the spelling was changed to 'Corunna' and the property is still used for raising sheep today.
The leases were bought by the Broken Hill Proprietor company (BHP), as it needed ironstone as flux for the smelters that it owned at Port Pirie (on the other side of the Spencer gulf). Initially, the iron ore was carted by bullock team to Port Augusta so that it could be shipped to the smelters. This was a two day journey, often in summer temperatures that have been known to reach 50 degrees Celsius or more. In 1900, an act of local parliament was passed to allow BHP to build a jetty at Hummock Hill (later to become the city of Whyalla), and a tramway from the jetty to the town.
In 1915, Iron Knob was formally proclaimed a township.