The archetypal $3d$ Mott insulator hematite, Fe$_2$O$_3$, is one of the basic oxide components playing an important role in mineralogy of Earths lower mantle. Its high pressure-temperature behavior, such as the electronic properties, equation of state, and phase stability is of fundamental importance for understanding the properties and evolution of the Earths interior. Here, we study the electronic structure, magnetic state, and lattice stability of Fe$_2$O$_3$ at ultra-high pressures using the density functional plus dynamical mean-field theory (DFT+DMFT) approach. In the vicinity of a Mott transition, Fe$_2$O$_3$ is found to exhibit a series of complex electronic, magnetic, and structural transformations. In particular, it makes a phase transition to a metal with a post-perovskite crystal structure and site-selective local moments upon compression above 75 GPa. We show that the site-selective phase transition is accompanied by a charge disproportionation of Fe ions, with Fe$^{3pm delta}$ and $delta sim 0.05$-$0.09$, implying a complex interplay between electronic correlations and the lattice. Our results suggest that site-selective local moments in Fe$_2$O$_3$ persist up to ultra-high pressures of $sim$200-250 GPa, i.e., sufficiently above the core-mantle boundary. The latter can have important consequences for understanding of the velocity and density anomalies in the Earths lower mantle.
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