Although long/continuous metallic chips are easily recycled by melting, this is not the case for discontinuous milling chips. The present study aimed to reduce waste generation and to facilitate the use of this byproduct in order to obtain a metallic-oxide composite. Chips were collected after machining Al-Si-Zn-Mg alloy parts, and powders were obtained through grinding processes. Grinding was performed at 45, 69, and 94 h, with grinding bodies/chips volume ratios of 6:1, 8:1, 10:1 and 12:1. The resulting powders were characterized by scanning electron microscopy, laser granulometry, and X-ray diffraction. After grinding, the particles were compacted and sintered, and hardness was evaluated. It was found that metallic powder is formed through plastic deformation, hardening, fracture, and dynamic recrystallization. It was possible to obtain samples with lower apparent density and higher hardness by powder metallurgy from Al-Si-Zn-Mg alloy chips than from the bulk. Powder was obtained after grinding, and samples were obtained by compacting and sintering. The higher hardness value was attributed to the presence of Al2O3 formed in the particles during grinding, which acts as a second reinforcing phase in the sintered samples, and as a retardant of intermetallic phase growing.