Long time ago we made brake pads using powders of iron and either alumina, or silica together with a binder. The use of powdered slag look reasonable to me. \At that time, a company use copper powder, but we proved that iron powder is not ovly chepaer but proved better tham copper.
Slag does not contain iron. To make the brake pad you will need improve hardness charged materials which is lacking in slag. If you grey caste iron by adding chromium, vanadium, titanium, nickel, bismuth improving hardness applicable for pad needs good fracture toughness.
Pad is generally made of copper, steel, graphite and brass bonded with resin. Ceramic brake pads are also possible.
But you can make it possible. Slag and sludge added with reinforcement of PP(poly propelyne), PTFE (hybrid polymer matrix composites) epoxy resin through the structural lamination composite methods. It can work as a pad.Mechanical property can be regained through composite process methods.