The compaction of powders depends both on grain rearangements and grain breakage. We introduce a grain fracture model prescribed in the framework of the contact dynamics method for the simulation of uniaxial compaction. We find that the grain size reduction is highly heterogeneous as a consequence of inhomogeneous stress transmission as observed in real grinding processes or in natural degradation of geomaterials. Even under high stresses, a significant fraction of grains survive whereas many grains are fully shattered. The grain size distribution tends to a power- law distribution with increasing size span. We analyze the progressive evolution of compressibility during compaction as well as the effect of grain shape and size distribution.