US Mint continues research for composition changes
- Published: Jan 12, 2016, 3 AM
Multi-ply plated steel and nickel-plated steel are not viable composition alternatives for the quarter dollar for security reasons because of the potential for fraud, according to a 39-page report released Jan. 11 by the Government Accountability Office.
The GAO report, which addresses the implications of changing metal compositions for current circulating U.S. coins, indicates that "the U.S. Mint determined that there is too great a risk that the size, weight and EMS [electro-magnetic signature] of any steel-based U.S. quarter may be too close to that of a less valuable foreign coin."
"According to Mint officials, this disparity may result in fraud because machines would not be able to differentiate between the U.S. quarter and lower-value foreign coins. According to U.S. Mint officials, it is viable to change the nickel and dime to multi-ply plated steel because these coins are lower in value and therefore do not provide a similar incentive to counterfeiters."
The electro-magnetic signature registers the value of each coin placed into coin acceptance equipment.
Mint officials have been exploring replacement compositions for circulating U.S. coinage in an effort to cut costs. The current cent is made of copper-plated zinc, the 5-cent coin copper-nickel and the dime, quarter dollar and half dollar are copper-nickel clad.
According to the GAO report, the U.S. Mint estimates that potential annual savings of between $8 million and $39 million are possible depending on what compositional alternatives are pursued. The highest cost savings, $39 million, could be reached if leaving the copper-nickel clad composition of the quarter dollar intact and changing the composition of the 5-cent and dime denominations to multi-ply plated steel.
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This type of change is referred to as a “co-circulating” alternative because different types of coin compositions for the same coin denomination would circulate together in the economy for 30 years or more.
"Under this co-circulating alternative, savings would result from both metal changes (as steel is less expensive than copper or nickel) and production changes. According to U.S. Mint officials, their metal suppliers would supply coin “blanks” for multi-ply plated steel coins, thereby eliminating the need for the U.S. Mint to make its own blanks," according to the GAO report.
The current 5-cent composition is a homogeneous mix of 75 percent copper and 25 percent nickel. The composition of the dime and quarter dollar are outer layers of 75 percent copper and 25 percent nickel bonded to a core of pure copper.
The $8 million savings, for a seamless alternative, would result from a change in metal costs alone, the GAO found.
This could be achieved, according to the GAO, by "increasing the amount of copper in the nickel and the outer clad layer of the dime and the quarter from 75 percent to 77 percent and decreasing the amount of nickel, which is more expensive, from 25 percent to 20 percent, and ... adding manganese to the coins. The seamless alternative is designed to have the same diameter and EMS characteristics and nearly the same weight as the current cupronickel composition. According to the U.S. Mint, this alternative would not require any changes to coin acceptance machines and would not affect industry."
Vending and other industries that would be affected by compositional changes vehemently oppose any switch from copper-nickel clad for the quarter dollar because to do so would require hundreds of millions of dollars in retrofitting coin acceptance equipment.
The GAO believes that the methods the U.S. Mint employed to calculate potential savings may have overestimated the totals.
The United States Mint has been researching coin composition alternatives since passage of the Coin Modernization, Oversight, And Continuity Act of 2010.
The 2012 report focused on testing of 49 alternative alloys. The options were pared to six for the 2014 report. Another biennial report to Congress on the metals research progress is scheduled to be submitted in mid-December 2016.
In its alternative metals research, the U.S. Mint has been investigating both co-circulating and “seamless” or transition options.
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