Material Insights · Understanding the Material World

Copper and Gold

Gold is a valuable by-product of porphyry copper mines and is recovered at copper smelters; at Grasberg, gold, silver and other credits cut the reported copper cash cost by about 70% in the first quarter of 2025. Prices are only moderately correlated because demand for the two differs.

Copper (commodity) and Gold (commodity): 4 relationships.

How they are linked

1. Gold from copper ores

Joint production · Medium · Copper mining and smelting → gold

Porphyry copper deposits often carry gold, which follows the copper into concentrate and is recovered at the smelter and refinery.

  • about 7% share of US gold recovered from base-metal ores, chiefly copper
  • about 3,300 t world gold mine output, 2025

Gold matters far more at large copper-gold mines such as Grasberg in Indonesia, where pre-incident 2026 estimates were 1.7 billion pounds of copper and 1.6 million ounces of gold. Custom smelters also recover gold from concentrate: Hindalco refines gold to over 99.90% purity in its copper business in India.

Sources: USGS; Freeport-McMoRan, via US SEC; Hindalco Industries

2. By-product credits

Cost and price · Strong · Gold price → copper mine costs

Mines report copper costs net of gold and silver sales, so a higher gold price lowers the stated cost of copper and supports output.

  • $1.46/lb gold, silver and other by-product credits per pound of copper at PT Freeport Indonesia, Q1 2025
  • $0.64/lb PT Freeport Indonesia unit net cash cost of copper after credits, Q1 2025

Credits were $2.55 a pound in the first quarter of 2024, so the fall shows how much reported copper cost depends on gold volumes and prices. When gold is high such mines are among the lowest-cost copper producers, which helps keep them running when copper prices fall.

Sources: Freeport-McMoRan, via US SEC

3. Price link: by-product source

Cost and price · Medium · Both ways

Gold credits tie copper mine economics to gold, and both respond to the dollar, but industrial and investment demand differ.

  • 0.32 monthly change correlation
  • 0.42 12-month change correlation
  • 1.11 fitted elasticity

Monthly moves correlate at 0.32 and yearly at 0.42, rising to 0.57 in the last five years. For 2025 USGS projected a record COMEX copper average of about $4.80 a pound and estimated gold at about $3,300 an ounce, so both were strong together that year.

Sources: USGS; Material Insights (World Bank, FRED, IMF data); USGS

4. Grasberg disruption

Shared risk · Medium · One mine outage hits both

A single copper-gold mine can be a large source of both metals, so an accident there cuts supply of both at once.

  • 8 September 2025 mud rush at Grasberg Block Cave, seven fatalities
  • about 35% potential cut to PT Freeport Indonesia 2026 output against pre-incident estimates

Pre-incident 2026 estimates were 1.7 billion pounds of copper and 1.6 million ounces of gold, and Freeport declared force majeure to some customers.

Sources: Freeport-McMoRan, via US SEC

For investors

Key learnings

  1. Gold credits make some copper mines very low-cost, so high gold prices help sustain copper supply from those mines.
  2. A copper-gold mine outage, as at Grasberg in 2025, cuts both metals together.
  3. Price correlation is moderate, 0.42 for yearly moves, so gold-rich copper miners carry exposure to two different demand cycles rather than one.

What to track

  • By-product credits in copper miners' unit costs: How far gold supports copper margins (Quarterly · company results)
  • Grasberg ramp-up after the 2025 incident: Recovery of copper and gold supply (Quarterly · Freeport-McMoRan reports)
  • Gold to copper price ratio: Shifts in mine economics for copper-gold deposits (Daily · LBMA, LME)

For policymakers

Key learnings

  1. Copper smelting in India also yields gold and silver, so smelter capacity adds to domestic precious metal supply.
  2. Copper-gold deposits are worth more than copper alone, which matters for exploration auctions.
  3. Supply shocks at one large foreign mine can hit both copper concentrate imports and gold supply.

What to track

  • Copper concentrate imports and treatment charges: Smelter feed and precious metal by-product (Monthly · Ministry of Commerce, industry data)
  • Gold recovered at domestic smelters: Domestic gold supply from copper (Yearly · company reports)

India

Hindalco refines gold and silver to over 99.90% purity in its copper business, so India gains some gold supply from processing copper concentrate.

Sources

  1. Mineral Commodity Summaries 2026: Gold, USGS (2026)
  2. Freeport-McMoRan first-quarter 2025 results (Form 8-K exhibit 99.1), Freeport-McMoRan, via US SEC (2025)
  3. Freeport-McMoRan third-quarter 2025 results (Form 8-K exhibit 99.1), Freeport-McMoRan, via US SEC (2025)
  4. Precious metals (gold and silver), Hindalco Industries
  5. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  6. Mineral Commodity Summaries 2026: Copper, USGS (2026)