Developing new, efficient methods for samarium and cobalt recovery from scraps/rejects and swarf at Sm–Co magnet manufacturing sites during shaping and finishing is an important task in terms of meeting their growing demand. In this work, the reaction of oxygen with a solution of samarium and cobalt chlorides in a LiCl–KCl eutectic melt was studied at 400–600 °C to explore possible methods for the separation and recovery of samarium and cobalt from these waste products. The pyrochemical reaction resulted in the formation and precipitation of samarium oxychloride, while the cobalt remained in the melt in a soluble chloride form. The effect of temperature and the amount of oxygen passed through the melt (oxygen-to-samarium molar ratio) on the course of the reaction were studied. Kinetic parameters of the oxygen with samarium chloride reaction were determined.