In secondary aluminium recycling, impurity reduction, especially of iron, is a significant challenge as it deteriorates the material quality in the aluminium melt. Recycled aluminium alloys are widely used in various industries, including automotive, marine, and structural engineering. Specifically, LM-6 aluminium alloy is commonly used in automotive engine parts and transmission cases. This research focused on reducing the excessive iron content in LM-6 alloy scrap. Elements like manganese (Mn), chromium (Cr) and zirconium (Zr) were added to the melt in form of synthesized powders to form intermetallic compounds. These powders will also act as grain refiners, neutralizers and reducing the detrimental effects on the alloys. The powders were synthesized using the ball milling method with a ball to powder ratio of (5:1) to enhance mixing and amalgamation with the melt. The melt was held at an optimized temperature of 640 ± 10°C to promote the formation of intermetallic sludge, encouraging the sedimentation of aluminium-iron (Al-Fe) intermetallic phases. XRD confirmed the formation of AlMn, AlCr, AlZr with other phases. After sedimentation, a glass fabric mesh with a pore size of 200 μm was used to effectively filter out β-iron during the filtration process. This technique reduced iron impurity in the melt by 50-60%. As a result, the mechanical properties of the recycled aluminium improved significantly: hardness increased by 14%, and tensile strength increased by 36%. The wear and corrosion resistance of the material also improved due to the incorporation of the synthesized powders. SEM analysis revealed the plate-like formation of iron structures and confirmed the presence of the manganese, chromium, and zirconium powders in the metallographic analysis.