copy with mates not generating new part.

You need to click OK (green tick mark or right click).

Example - Copying with Mates

Copy with mates in SolidWorks

BTW you can create a configuration in the same part having different material and then in assembly configuration change the part configuration to other configuration.

I don't use the Copy with Mates very often (but it's a big help when I do need it), and I'm at home now and don't have SW here to check, but it's possible that SW won't let you put a part in the same place as the original with that feature.  If I understand what you're trying to do, then you don't need a new part inserted anyway.

You said "The reason I want to do so is because I want to add a similar part in the same position only with a different material and then insert it into a new configuration."  If you have multiple configurations of the assembly using different configurations of the same Part, then there is a much easier way to do it.  Right-click on the Part name in the assembly tree and choose "Configure component" from the drop-down.  That will bring up a simplified design table with all of the assembly configurations listed.  You can assign which configuration of the part you want to use for each assembly configuration.

Ben,

The part you are trying to "copy with mates" should not be a fixed part.

That part should have mates already with other components

Are you getting an error message when to try to "copy with mates"?