Nanostructured composite materials consisting of exchange-coupled hard and soft magnetic phases are proposed as alternative for the development of high-energy product permanent magnets. In this work, we have examined the effects of soft magnetic α-Fe addition on the structure and magnetic properties of powders composed of hard magnetic Mn54.3Al44C1.7 compound. The optimum melt-spun ribbon precursor (with τ-phase structure, with magnetization of 88 emu/g and coercive field of 1.6 kOe) was obtained after annealing the ribbons at 500 ∘C for 20 min. After the combination between the soft and the optimized hard phase, the intensity of τ-phase peaks measured by X-ray diffraction decreases. These changes can also be seen in the magnetic properties. The coercivity (∼ 500 Oe) tends to decrease with the annealing temperature, while the magnetization tends to increase up to 141 emu/g. Evidence of good exchange coupling between particles of Mn54.3Al44C1.7 and α-Fe, in the produced composite, was proved by the hysteresis loop and its corresponding Thamm-Hesse analysis. © 2018 Springer Science+Business Media, LLC