WASHINGTON -- It costs 2¢ to make and distribute a Lincoln penny, and more than 11¢ for a nickel, according to a new two-year study released by the U.S. Mint. But the agency is on a mission to find a way to bring the metal and production costs of U.S. coins closer to their actual face value, and with the least possible impact to the vending industry.
The Mint has been working with a research and development consultant to test scores of metals and dozens of different alloys to identify potential cost-cutting changes to the composition and methods of manufacturing circulating coinage.
In a progress report, the Mint explained that additional R&D is necessary before it can recommend any changes to the current coin composition. Going forward, the agency said it will continue to develop and test potential alternative materials; conduct production-scale runs to validate supply chains, "manufacturability" and costs; and further verify the estimated costs to stakeholders that depend on coins.
The Mint said in its report that vending operators are an important group among those stakeholders. The vending industry, which has worked closely with the agency, estimates a one-time upgrade of its machines to accept coins of the same size and weight as the current ones, but with a different electromagnetic signature, would cost between $700 million and $3.5 billion.
Except for pennies, all current U.S. circulating coins have the electromagnetic properties of copper, the report says.
Another challenge for the Mint is the rising cost of copper, used in all U.S. coins, and nickel, used in all except pennies. Only four of the 80 metals on the periodic table -- aluminum, iron, zinc and lead -- presently cost less than copper and nickel, according to the report.
The U.S. Mint is now beginning the second part of its testing to determine if it can produce coins that are not only cost efficient, but also have the same weight, durability and look as current coins.