In the thermite process, iron oxide is reduced to molten iron by Al powder because

The reduction of the metallic oxide with Al is known as the thermite process. Aluminium is used as a thermite mixture in thermite welding. Al powder is used as it is a strong reducing agent and it reduces Fe2​O3​ to iron. Reduced molten iron sinks and flows into the gap of the grinder thereby welding it.Fe2​O3​ + 2Al → Al2​O3​ + 2Fe