This is a Thermite reaction that can be done safely indoors. The rust (Fe2O3) reacts with the aluminum foil (Al) to produce aluminum oxide (Al2O3), elemental iron (Fe) and heat. This reaction is a highly exothermic, single replacement reaction. Aluminum is oxidized and iron is reduced. The melting point of iron is 1530°C and the reaction temperature reaches approximately 2200 °C. (Thermal Energy released is ΔH° = –849 kJ/mole).
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