While two years of initial research and development by the U.S.
Mint into coinage metals and alloys offer some promising composition
alternatives, some factors have to be examined further to ensure a
seamless transition should changes be approved, says Deputy U.S. Mint
Director Richard A. Peterson.
Peterson said the U.S. Mint has an active plan in place to
continue its research and development efforts in 2013.
Along with the experimental striking of test pieces thus far,
significant precautions are being taken to ensure that none of the
experimental strikes and planchets end up in collector hands, Peterson confirmed.
In a Dec. 20 interview with Coin World, Peterson said of
primary importance is to identify and confirm the existence of a
viable supply chain for any metallic alternatives for coinage that
might be selected. The U.S. Mint must establish from whom it could buy
strip, blanks or finished planchets, Peterson said.
Peterson’s comments suggest that the U.S. Mint appears to be
leaning toward acquiring finished, ready-to-strike planchets, like it
receives for the Lincoln cent — the denomination with the highest
mintage for circulation — rather than planchet strip from which the
Mint would punch planchets. Currently, the Mint produces many of its
own planchets using strip supplied by vendors.
Peterson added that the Mint wants to have more than one supplier
for each composition and denomination. He said the U.S. Mint does not
want to be put in the same position as the Bureau of Engraving and
Printing, which has a single supplier — Crane & Company — for its
security paper to print Federal Reserve notes.
As part of continuing experimentation with alternative
compositions, trial strikes will have to be struck not just in the
hundreds or thousands of pieces (as has already occurred), but in full
production runs in the millions of pieces to flush out complete
production issues and confirm precise costs, Peterson said.
Also, the U.S. Mint has to address any issues with its
stakeholders — primarily the vending machine, coin dispensing and
counting and transit industries —and determine how any switch to
alternative metals will affect their operations, Peterson said.
Peterson said U.S. Mint officials want any transition to be
seamless. In part, that means the Mint prefers that any new
compositions have the same electromagnetic signatures for electronic
recognition as existing compositions, and that the current diameter
and weight be retained for any denominations produced in new compositions.
However, it’s likely that while the diameter may be retained, the
weight and thickness would change depending on the density of the
metals selected, which might also result in a needed change in
Currently, Peterson noted, the 5-cent coin, the dime and the
quarter dollar all have electromagnetic signatures based on copper
(the dominant metal in the copper-nickel alloys used for the three
coins). Substituting alternative compositions with different
electromagnetic signatures for denominations that would co-circulate
with the same denominations in their current metallic configurations
would have major cost ramifications for those industries using the
coins, he said.
The top contenders for an alternative composition to replace that
for the 5-cent coins are copper-based, but the alloys identified as
promising would result in a coin of a yellowish hue instead of the
current silver-gray appearance.
Peterson said if Congress wants significant savings from
production of 5-cent coins for circulation, legislators may embrace
the idea of a color change for the denomination.
Peterson said if the U.S. Mint opted for multi-ply-plated steel
for one of its alternatives, it would likely have to compensate the
Royal Canadian Mint for its patented process.
U.S. Mint and Treasury officials have not broached the subject of
seeking a recall of coins of current composition to melt them for
metal reclamation and replace the recalled coins with the alternative
compositions, Peterson said. The Royal Canadian Mint, which in recent
years has introduced new compositions for its coins, is following a
metal reclamation process by reclaiming and melting older coins.
Peterson noted that it is against U.S. federal law for the public
to melt cents and 5-cent coins to reclaim the metal.
Peterson said the U.S. Mint is not equipped to implement a recall
and has a “general distaste” to do so.
In addition, the U.S. Mint is in the business of selling its coins
to the Federal Reserve for circulation distribution, not in the
business of harvesting coins by buying them from the public, Peterson said.
Once a new composition is identified and approved, implementation
of the changes would take three to four years to complete it
correctly, Peterson said.
The U.S. Mint has been wrestling with the overall production costs
above face value for the Lincoln cent (made of copper-plated zinc) and
the Jefferson 5-cent coin (made of copper-nickel) for the past six years.
The last time total costs were below face was 2006, when it cost
0.097 cent to produce a cent and 4.84 cents for the 5-cent denomination.
In 2007, the costs climbed to 1.21 cents for the cent and 5.97
cents for the 5-cent coins. Production costs have remained above the
two coins’ face value since 2007.
Total production costs for the Lincoln cent reported in March 2012
were 2.25 cents, down from 2.41 cents in 2011.
Total production costs for the 5-cent coin were 9.95 cents as
reported by the Mint for March 2012, down from 11.18 cents in 2011.
Even with a switch to a new composition, overall production costs
for the cent will never ever again fall below the coin’s face value,
Peterson said half of the cost of the cent is in metals
acquisition, with the other half being production and distribution.
The continual losses generated by the production of each cent and
5-cent coin drew the attention of Congress, which subsequently passed
the Coin Modernization, Oversight, and Continuity Act of 2010. The act
requires the Mint to conduct extensive research and development into
alternative metals and alloys not only for the cent and 5-cent coin,
but for all circulating coin denominations.
The act also requires the Mint to biennially report to Congress
the findings and recommendations of any ongoing research.
The first biennial report, a 400-page document compiled by
Concurrent Technologies Corp., Johnstown, Pa., was submitted Dec. 13,
and released publicly the following day.
U.S. Mint officials did not make any direct recommendations to
Congress supporting any of the findings for compositional changes.
U.S. Mint and Concurrent Technologies Corp. technical personnel
jointly conducted the alternative metals research and testing in a
dedicated area in the basement level of the Philadelphia Mint. The
production testing was overseen by the U.S. Mint.
Peterson said the restricted area is under tight security, fitted
with surveillance cameras for continued monitoring.
Peterson said all test strikes are accounted for, recorded and
kept secure at the Philadelphia Mint.
Examples from the testing will eventually be forwarded to the
National Numismatic Collection at the Smithsonian Institution’s Museum
of American History for historical safekeeping and possible public
display, Peterson said.
The U.S. Mint has also kept a tight rein over any experimental
strikes it shipped to outside vendors for use in testing vending,
coin-sorting and dispensing equipment capabilities, Peterson said. The
chain of possession of each of the experimental strikes has been
maintained, he said.
On occasion, experimental strikes from earlier Mint testing have
entered the collector marketplace. ■