Mercury's principal ore is cinnabar, mercury sulfide, and cinnabar is a spectacular material in its own right: a deep saturated scarlet, ground since the neolithic as a pigment and as a burial powder. Ground and purified it is vermilion, the most brilliant red available to painters before modern synthetics, used from Roman wall painting through Chinese lacquer to European panel and manuscript work. Chinese vermilion was being made synthetically from mercury and sulfur by at least the Tang period.
The mines at Almaden in Spain have been worked for mercury for over two thousand years and supplied a large share of world production well into modern times.
What made cinnabar central to alchemy was not the colour but a demonstration. Heat cinnabar in air and it gives up liquid metal directly; combine that liquid metal with sulfur and it reconstitutes as a red solid. A brilliant red mineral becomes a running silver liquid and can be returned to red again, reversibly, in a simple apparatus. There is no better visible argument that substances are composed of principles which can be separated and recombined, and it was performed and re-performed for centuries as exactly that.
Chinese alchemy went further and treated cinnabar as the central substance of the elixir of immortality. Mercury and cinnabar preparations were taken internally in pursuit of long life, and several Chinese emperors are recorded as having died of them, including, on the standard account, the first emperor Qin Shi Huang. The tomb of Qin Shi Huang is described by Sima Qian as containing rivers and seas of flowing mercury, and soil surveys of the unexcavated mound have found anomalously high mercury concentrations, which is a rare case of a classical text being partially corroborated by instrument.