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Samples of (MgB2)0.96Ni0.04 prepared by mechanical alloying were sintered at 750°C for 30 min. The reactive process and generating temperature of the second phase were investigated by employing differential thermal analysis, X-ray diffraction, and scanning electronic microscopy. Corresponding microstructures and superconducting properties have also been analyzed. It is found that two-step milling is effective in refining the structure and in eliminating flux jumps, although the corresponding Jc is slightly lowered due to the existence of excessive MgO. This observation indicates that the bulk samples prepared by two-step milling possess stable properties of magnetism and heat compared with the sample prepared by manual milling.