Sm₂TM₁₇ sintered magnets, (where TM = Co, Fe, Cu, Zr), are typically utilised in high temperature magnetic applications due to their magnetic properties being very stable at 200–350 °C. Sm and Co are critical materials and need to be recycled to reduce reliance on virgin material supply chains. This work explored HD processing of Sm₂TM₁₇ sintered magnet production scrap as a potential recycling technique. Sintered magnet scrap was initially analysed compositionally, microstructurally and magnetically to determine issues with magnet quality. Scrap material was then HD processed at 18 bar and 2 bar at temperatures between 25–300 °C. The resultant material was characterised in terms of hydrogen content, particle size, degassing behaviour and unit cell expansion. Production scrap magnets exhibited irregular demagnetisation traces with poor domain wall pinning behaviour. Non-magnetic ZrC inclusions likely prevented cell structure formation locally and hence were poor domain wall pinning sites. Scrap material processed at 18 bar and 2 bar required temperatures of 100 °C to allow for the greatest extent of HD reaction, reaching 0.299 Wt.% and 0.323 Wt.% hydrogen respectively. The HD behaviour of production scrap material was comparable to commercial grade magnets. Therefore, HD is a potentially viable technique for recycling Sm₂TM₁₇ sintered magnet production scrap.