Magnetic Properties of dust cores made of mixtures of atomized pure iron powder and pure alumina powder has been investigated in the temperature range from 673 to 1073K. The effect of annealing on coercivity has been positive effect up to 973K and thus coercivity is gradually reduced form 280A/m (as-compressed) to 160A/m (973K). However, dust cores annealed at 1073K displayed a 15% increasing of coercivity by annealing at 973K. Hysteresis loss shows a tendency similar to coercivity. Microstructure observation of specimens shows grain refinement by recrystallization in the temperature range from 773 to 1073K.