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The effect of Co substitution on structure, phase transformation, and magnetic properties of R(16)Fe(76-x)Co(x)C(8) (R equivalent to Nd, Dy; 0 <= x <= 76) alloys prepared by a remilling process has been studied systematically. The process of remilling and subsequent annealing is more beneficial for the formation of Nd(2)(Fe,Co)(14)C compound in Nd(16)Fe(76-x)Co(x)C(8) alloys than in Dy(16)Fe(76-x)Co(x)C(8) alloys. The R(2)(Fe,Co)(14)C phase is obtained for Nd(16)Fe(76-x)Co(x)C(8) alloys with 0 <= x <= 20 and Dy(16)Fe(76-x)Co(x)C(8) alloys with 0 <= x <= 25. Higher Co content results in the formation of Nd(2)(Fe,Co)(17)C(delta)-type phase and Dy(Fe,Co)(7) phase for Nd(16)Fe(76-x)Co(x)C(8) and Dy(16)Fe(76-x)Co(x)C(8) alloys, respectively. The high coercivity, (i)H(c)=48.5 kOe, is achieved for Dy(16)Fe(51)Co(25)C(8) alloy. (C) 2008 American Institute of Physics.