Yep, it requires iron ore, which is basically rust. You could use pure iron, but it's going to rust anyway when you put it in the water so iron ore should do. Problem is it might have to be a very fine dust so that it won't sink and will disolve very quicky. Working out the best substance to use and how to powder it is something that will have to be worked out.

As for current ships scattering a bit of it, they might not past through the best areas for seeding and at the moment they might be accused of littering.