This work was aimed at investigation of a technique for compaction of swarf leading to an increased recovery rate of remelted magnesium by decreasing oxidation loses at the surfaces and decreased hazards of transportation of swarf. A new method of enhancing compaction of magnesium to full density is developed, namely Equal Channel Angular Extrusion (ECAE) with back-pressure. It was found that ECAE promotes compaction very effectively. Parameters affecting the compaction process were investigated. The role of grease and other contaminants, lubricants, oxide films and the need to remove them, were also considered. It was shown by re-melting experiments that recovery of magnesium increased significantly to 77% for swarf which has not been cleaned of machining oil and to 92-96% for cleaned swarf. A comparison with the conventional technology of briquetting of swarf has been made. The briquetting technique allows producing batches with a density of 1.4 - 1.5 g/cm3 and has led to recovery rates of 46 and 68% respectively for cleaned and uncleaned swarf.