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The work presents a possibility of fabrication of inexpensive iron-based powders intended to form the matrix in sintered diamond-impregnated tool components. In this study, a finely dispersed, pre-alloyed steel powder, containing over 95 wt.% Fe, has been designed and fabricated by means of a proprietary process developed at AGH-University of Science Technology. It has been shown that the experimental powder can be consolidated to a closed porosity condition (95% theoretical density) by pressure-less sintering at a temperatur