PURPOSE: To obtain an alloy suitable to produce a Dy-Fe-B alloy by water- cooling the obtd. alloy and removing CaO converted into Ca(OH)2, at the time of producing Fe-Dy alloy be reduction-diffusion process containing Ca as a reducing material.

CONSTITUTION: Particle mixed material containing Dy2O3, Fe and Ca is compacted. This green compact is heated to make a Dy and Fe alloy and CaO and form a particle aggregation having under 35 mesh. Successively, this aggregation is water-washed at temp. of ≤10°C to change Ca and CaO into Ca(OH)2. Then, the Ca(OH)2 is removed from the particle aggregation while preventing the oxidation of the particle aggregation. In such a way, the alloy suitable to be used to produce the rare-earth element-containing Fe-B permanent magnet, is obtd.