A magnesium alloy was fabricated through the consolidation of chips accumulated during the turning process, followed by cold compaction and hot extrusion. A variation in the depths of cut was done during turning to understand the effect of deformation imparted during primary processing on the mechanical properties of an AZ91 alloy (Mg–9 wt.% Al–1 wt.% Zn–0.3 wt.% Mn). The results revealed a significant improvement in compressive strengths (up to 75%) with increased depth of cut, without compromising ductility through the development of fine-grained structures and prior plastic strain induction. This approach resulted in superior materials vis-a-vis conventional deformation techniques and promotes cost and energy efficiency through recycling industrial metal swarf, which is a significant environmental and economic concern.