Making coins may soon make more cents.
Because of rapidly rising metals prices, it currently costs far more for the U.S. Mint to manufacture pennies and nickels than the face value of the coins themselves. That means the government loses money making the coins, a cost to taxpayers.
But under a measure recently proposed by members of the Senate and House, the Mint would have the power to alter the metal composition of coins to make them cheaper. Only Congress can change coin compositions, which happens only rarely.
"We should make the government more efficient in any way we can," House Financial Services Committee Chairman Barney Frank, D-Mass., says of the measure.
The committee says a change in the composition of the penny and nickel could save the government more than $100 million each year. If changes were made to other, higher-denominated coins, the savings could reach $400 million.
It currently costs about 1.5 cents to produce a penny and 8.2 cents to produce a nickel, according to the Mint. Skyrocketing metals prices, a result of a strong worldwide economy, have led to the increased costs. For example, even though prices have declined a bit recently, copper costs are up more than 24% since the start of the year.
The higher metals costs led the Mint earlier this year to prohibit people from melting down the coins to sell the metal, out of concern that a coin shortage could evolve. Violators face five years in jail. Thus far, no one has been caught breaking the anti-melting law.
The Mint makes up for the losses of producing pennies and nickels with the manufacture of other, higher-value coins such as quarters. But the head of the Mint said he would welcome the opportunity to cut costs.
"This proposed legislation establishes an open, flexible process to evaluate and use alternative materials for producing our nation's coinage more economically," Mint Director Edmund Moy said in a statement.
The penny has been 97.5% zinc and 2.5% copper since 1982. The nickel has been 75% copper and 25% nickel since it was first produced in 1866 except for a brief period during World War II.
Altering the coins will need to be done carefully, notes Rod Gillis, head of numismatic education at the American Numismatic Association. Metals vary in weight and hardness and changes can make a difference in the manufacturing process.
Plus, vending machines recognize the value of coins in part by the electromagnetic signature that is unique to the composition of the metals. Mimicking those characteristics could be tricky, he says.