Banded Iron formations occur in Proterozoic rocks, ranging in age from 1.8 to 2.5 billion years old. They are composed of alternating layers of iron-rich material (commonly magnetite) and silica (chert). Each layer is relatively thin, varying in thickness from a millimeter or so up to several centimeters. Here is one theory as to how they might have formed:
It is theorized that the Earth's primitive atmosphere had little or no free oxygen. In addition, Proterozoic rocks exposed at the surface had a high level of iron, which was released at the surface upon weathering. Since there wasn't any oxygen to combine with it at the surface (like happens now in our oxygen-rich atmosphere), the iron entered the ocean as iron ions. At the same time, primitive photosynthetic blue/green algae was beginning to proliferate in the near surface waters. As the algae would produce O2 as a waste product of photosynthesis, the free oxygen would combine with the iron ions to form magnetite (Fe3O4), an iron oxide. This cleansed the algae's environment. As the biomass expanded beyond the capacity for the available iron to neutralize the waste O2 the oxygen content of the sea water rose to toxic levels. This eventually resulted in large-scale extinction of the algae population, and led to the accumulation of an iron poor layer of silica on the sea floor. As time passed and algae populations re-established themselves, a new iron-rich layer began to accumulate. Unfortunately, the algae were of relatively low intelligence and were unable to learn from their past excesses (this was also before the EPA), so they would again proliferate beyond the capacity of the iron ions to clean up their waste products, and the cycle would repeat. This went on for approximately 800,000,000 years!