The effects of Co, Fe and Ni catalysts generated from their nitrate precursors on the formation of carbon nanotubes (CNTs) from pyrolysis of phenolic resin were investigated, and the former two performed the best at 873 K, and 1073–1273 K, respectively. Density functional theory calculations indicate that a Co nanocluster requires the lowest energy for forming the five-membered carbon ring (the controlling step in the CNT generation), making Co the best catalyst for the formation of CNTs at relatively low temperatures. On the other hand, molecular dynamics calculations show that an Fe nanocluster has the highest melting point among the three nanoclusters and can retain its integrity at 1280 K, making Fe the best catalyst for the formation of CNTs at relatively high temperatures. Hot modulus of rupture of the CNT (along with additionally formed SiC whisker) reinforced low-carbon MgO–C refractory sample containing 0.25 wt% Fe catalyst was about 20% higher than that of its catalyst-free counterpart.