By Hubert Walker for CoinWeek ….
If you read nothing else concerning the U.S. Mint’s December 12 biennial report on coin production costs and research into production alternatives, then here are the report’s conclusions:
- There is no material that can make cent production cheaper.
- Currently, the costs to industries that make use of coin-accepting machines (such as vending, parking meter or change machines, etc.) far outweigh the savings incurred by using the most promising alternative coin composition.
- Businesses with a stake in coin-accepting machines recommend the Mint make no change whatsoever to the quarter at this time, no matter what changes might be made to smaller denominations.
- Zinc-based compositions aren’t good enough for denominations over one cent; multi-ply and nickel plated steel aren’t good enough for denominations higher than a quarter.
- Therefore, the US Mint does not recommend changing coin compositions at this time, though research is ongoing.
Friday’s release was the second biennial report as mandated by the Coin Modernization, Oversight, and Continuity Act of 2010 (Public Law 111-302), which requires the Treasury Secretary to research alternative means of manufacturing coins and reducing costs at the Mint. The Secretary must also issue a status report regarding such research every other year. The first report was released in December 2012.
Since 2010, the Mint has investigated 29 alternative coin compositions, with six showing real promise. The six compositions were then subjected to further testing. They include: nickel-plated steel, multi-ply-plated steel, stainless steel, copper-plated zinc, tin-plated copper-plated zinc and an 80/20 copper-nickel mixture. The 80/20 cupronickel was the best candidate of the group since its weight and electromagnetic signature (EMS) are almost identical to coins circulating presently.
A ringed-bimetallic option was also considered.
However, after much consultation (via the Office of Coin Studies, established by the Mint in 2013) with various members of the coin-accepting machine industry, it became apparent that the $5 to $7 million in savings switching to the 80/20 copper-nickel coinage might generate in no way makes up for the $2.5 to $6 billion such a move would cost the industry.
Nevertheless, research into alternative compositions continues, as does research into alternative production techniques and technology. Two manufacturing innovations are especially noteworthy. One is a system of lasers used to create coin blanks; the other involves a “push-back” system that would eliminate the need for on-site planchet annealing. While the laser system is an effective way to produce blanks, its use isn’t economical at this time. The push-back system, in addition to allowing off-site bulk annealing, is not only an efficient means of production, but is also similar enough to current techniques that little capital investment would be needed to implement it.
But much like alternative coin compositions, further research is necessary.
The report also detailed some of the factors impacting Mint expenditures for fiscal years 2013 and 2014. Among the key findings is the fact that even though costs had increased 17.8% since 2012, the decrease in base metal spot prices–not including zinc and nickel–was enough to help the Mint save money instead.
Also, increased demand for quarters managed to replace the seignorage lost when the golden dollar coin ceased to be minted for circulation.
The United States Mint also consulted with the Royal Canadian Mint due to the Canadian mint’s experience with plated steel coinage. Ultimately, the three steel-based alternative composition candidates were rejected as currently formulated because of their hardness–though again, additional research may change the situation.
The report says that the Treasury Department will continue to engage the coin-accepting machine industry and study consumer reaction to any change in American coinage.