Grinding is a finishing process for high precision, high surface quality parts, and hard materials, including tool fabrication and sharpening. The recycling of grinding scraps, which often contain rare and costly materials such as tungsten carbide (WC-Co), has been established for decades. However, there is a growing need for more energy-efficient and environmentally friendly recycling processes. Currently, grinding sludges, which are a mixture of abrasives, lubricants, and hard metal chips, are only treated through chemical recycling. Direct recycling (“reuse” of chips as raw material) is the most effective but not yet viable process due to the presence of contaminants. This paper presents an oil-free dry grinding process that produces high-quality chips (i.e., oil-free and with few contaminants, smaller than 60 mesh particle size) that can be directly recycled, as opposed to the oil-based wet grinding that generates sludges, which require indirect recycling. The proposed alternative recycling method is validated experimentally using WC-Co chips from a leading hard metals’ processing specialized company. The contaminant level (oxygen 0.8 wt.%, others < 0.4 wt.%), granulometry (chip D50 = 10.4 µm with grain size < 3 µm) and morphology of the recycled chips’ powder is comparable to commercial powders proving the research and industrial potential of direct recycling. The comparison of sintered products using recycled and commercial powder provided equivalent characteristics for hardness (HRA of 90.7, HV30 of 1430), porosity grade (A02-04) and grain size (<3 µm).