Magnetite (Fe2O3) is an important ore of iron. As its name implies, it's also magnetic. This mine is in Harriman State Park - a region known as the Hudson Highlands. The geology of the Hudson Highlands is very similar (identical, really) to the geology of the Adirondacks and both regions actually represent the highly metamorphosed and deformed rocks which underlie all of New York State (much of the East Coast, actually).
This area of crust is known as the Grenville Province and represents rocks formed during an ancient collision between two blocks of continental crust (proto-North America and Amazonia) between 1.3-1.1 billion years ago. That collision, much like the more modern collision of India with Asia, built a Himalayan-scale mountain belt running through what's now New York State. Deep in that mountain belt, rocks folded and metamorphosed due to the extremely high temperatures and pressures present some 12 miles below the peaks of those mountains. Those are the rocks we now walk on at the surface in the Adirondacks or Hudson Highlands (elsewhere in the state, these ancient basement rocks are covered by thousands of feet of younger sedimentary rocks).
A bit over 900 million years ago, hot fluids circulated through fractures and faults in these deeply-buried rocks. These iron-rich fluids precipitated crystals of magnetite within these linear fracture zones. In other places, like the Sierra Nevada Mountains in California, similar fluids at other times precipitated minerals like gold but we got iron. Iron, however, is a valuable mineral resource.
In the 1700s, settlers discovered and started mining iron ore in the Highlands. It's actually relatively easy to find - you can walk along with a compass and when the needle deflects, you're walking over a vein of magnetite iron ore. Magnetite is also easy to recognize being black and very dense. The abundant trees and water power in the Highlands led to the development of furnaces to smelt and utilize the iron. It became very important to the colonists during the Revolutionary War and was used to forge cannons, tools, and the famous chains across the Hudson.
With the discovery of iron ore in the Mesabi Range of Minnesota and the Upper Pennisula of Michigan (with cheap shipping on the Great Lakes), iron mines in the Highlands (and up in the Adirondacks) gradually were abandoned. Today, all that's left are these gashes in the woods, often flooded with groundwater, and small piles of overgrown waste material next to the mines.