N-type ${eta}-FeSi_2$ with a nominal composition of $Fe_{0.98}Co_{0.02}Si_2$ powders has been produced by mechanical alloying process and consolidated by vacuum hot pressing. As-milled powders were of metastable state and fully transformed to ${eta}-FeSi_2$ phase by subsequent isothermal annealing. However, as-consolidated $Fe_{0.98}Co_{0.02}Si_2$ consisted of untransformed mixture of ${alpha}-Fe_2Si_ 5$ and $varepsilon$-FeSi phases. Isothermal annealing has been carried out to induce the transformation to a thermoelectric semiconducting ${eta}-FeSi_2$ phase. The transformation behavior of ${eta}-FeSi_2$ was investigated by utilizing DTA, a modified TGA under magnetic field, SEM, and XRD analyses. Isothermal annealing at $830^{circ}C$ in vacuum led to the thermoelectric semiconducting ${eta}-FeSi_2$ phase transformation, but some residual metallic $alpha$ and $varepsilon$ phases were unavoidable even after prolonged annealing. Thermoelectric properties were remarkably improved by isothermal annealing due to the transformation from metallic $alpha$ and $varepsilon$ phases to semiconducting phases.