The cycling of iron and organic matter (OM) is thought to have been a major biogeochemical cycle in the early ferruginous oceans which contributed to the deposition of banded iron formations (BIF). However, BIF are deficient in OM, which is postulated to be the result of near-complete oxidation of OM during iron reduction. We test this idea by documenting the prevalence of OM in clays within BIF and clays in shales associated with BIF. We find in shales >80% of OM occurs in clays, but <1% occurs in clays within BIF. Instead, in BIF OM occurs with 13C-depleted carbonate and apatite, implying OM oxidation occurred. Conversely, BIF which possess primary clays would be expected to preserve OM in clays, yet this is not seen. This implies OM deposition in silicate-bearing BIF would have been minimal, this consequently stifled iron-cycling and primary productivity through the retention of nutrients in the sediments.