PURPOSE: To produce the captioned powder of superior powder characteristics economically by roasting grey cast iron machining debris in an oxidative atmosphere then reducing and decarburize the same in a reducing atmosphere, grinding the same through impact action to make oxides and graphite to fine particles and separating away these fine particles.

CONSTITUTION: Grey cast iron machining debris is roasted in an oxidative atmosphere to let oxide films be formed on the surface, thence it is subjected to reduction graphitization in a reducing atmosphere to reduce the iron oxide and at the same time to decarburize the residual carbon and graphitize the same. Next, the slight oxides and graphite remained are ground to fine particles through impact action and the fine particles are passed through a cyclone and are thereby separated away.