Amount of metal residue from incinerators or melting furnaces of incinerator bottom ash has been increased in Japan. The metal residue contains valuable metals such as copper, silver and gold. Main components of the metal residue are copper, phosphorus, silicon and iron of the remainder. Copper content is 5 to 20% and too low to recover the valuable metals in a conventional copper smelter, so a new approach to upgrading the valuable metals with phase separation in molten metal system was researched. Whereas the binary melt of iron and copper is miscible over all composition, the addition of carbon or phosphorus to the binary melt leads to phase separation between an iron phase and a copper phase. The copper phase absorbing the precious metals is feasible for refining in a conventional copper smelter. Fundamental information about the phase separation, recovery of copper and distribution ratio of the valuable metals are presented.