I've seen rather a LOT of blacksmithing (thought I've done almost none), and that's not how it works!
That's how it works though. When making steel (which almost nobody does themselves nowadays), the first step is casting the ingot. Then you start hammering it flat, fold and weld it on itself dozens of times to burn of excess carbon and get small, homogenous crystals. If you have extremely bad (low carbon) iron, you might also first weld it on a piece of refined steel, which speeds the process up, but reduces the quality a little and gives you dark lines on the finished metal (which, ironically, many people will pay extra for).
With a well-made iron ingot, you'd get few, long sparks. The many short sparks shown here suggest a lack of carbon from overheating, which would make it unusable for blades or tools.
As japanese tamahagane is one of the few types of steel still regularly produced in this manner, I guess that's where the author got the idea.
