Granular materials in the system Fe-x-(Al2O3)(1-x) With different volume fractions of Fe have been prepared by ball milling pure Fe and sol-gel derived Al2O3 gel powders up to 80 h. The final metal average particle size obtained ranged from 7-18 nm in different samples. We studied the variation of the magnetization and coercivity with the milling time. Coercivities as high as 550 x 10(-4) T and 990 x 10(-4) T at room temperature and at 5 K, respectively, were obtained for the x = 0.4 sample milled for 42 h. Presence of single domain and superparamagnetic particles may result in such high values. Low-temperature magnetization studies confirm the presence of superparamagnetic particles in the samples.