Carbon-encapsulated iron carbide nanoparticles have been produced by co-carbonization of a mixture of an aromatic heavy oil and ferrocene at 450 degrees C under autogenous pressure. Transformations of the morphology and electronic structure of nanoparticles induced by air oxidation and subsequent heat treatment in a nitrogen atmosphere were examined using transmission electron microscopy. X-ray diffraction, near edge X-ray absorption fine structure spectroscopy, and X-ray emission spectroscopy. It was found that hollow nanoparticles, composed of iron oxides and oxidized carbon, were developed with thermal air oxidation of the initial product at 280 degrees C for 5 h. The mild oxidation of the product (250 degrees C for 3 h) followed by the carbonization at 500-550 degrees C yielded the hollow nanoparticles containing iron carbide/oxides and defective graphite-like carbon. The further annealing of nanoparticles at 1000 degrees C produced carbon nanocapsules with highly graphitized carbon walls and partially filled by spherical iron carbide nanoparticles. (C) 2012 Elsevier B.V. All rights reserved.