A method of and an apparatus for compressing the grinding sludge, which is effective to compress the grinding sludge to provide an intended rigid briquette even though the grinding sludge contains ground chips of hardened iron and/or steel materials and an oil-based coolant and also to facilitate reuse of the briquette (B1) as material for production of steel. The grinding sludge containing the oil-based coolant and hardened component parts such as steel component parts that are used in bearings is compressed. To this end, the grinding sludge produced from a grinding line (1) is filtered by a filtering unit (4) to provide a concentrated sludge which is subsequently compressed by squeezing by a briquetting machine (5) to provide the briquette (B1). The briquette B1 so obtained can be reused as steel material. The coolant separated from the grinding sludge during filtering and squeezing is returned to the grinding line (1) through recovery passages (7, 8).