Steel Cents and Nickels Dead in Water?
By Mike Unser
Legislation to change
the metallic composition of the penny and nickel
to a less expensive copper-colored steel passed
in the U.S. House of Representatives on May 8,
However, the plunge in base metal prices since
could very well end the legislation’s chances of
moving forward in the Senate.
The goal of the bill, which it titled Coin
Modernization and Taxpayer Savings Act of 2008 -
H.R. 5512, was directed toward saving money
after high copper prices pushed production costs
of the penny up to about 1.26 cents and the
nickel to about 7.7 cents.
Since May, copper prices have fallen to where
the melt value of a penny is now under a half
cent and the nickel is just slightly higher than
5 cents — the U.S. Mint now makes money issuing
pennies and almost breaks even with nickels.
Prior, high copper costs resulted in an
estimated $100 million annual production loss
for the two coins. Rep Luis V. Gutierres, the
subcommittee Chairman who held a hearing over
the bill back in March of 2008, commented then,
“If we continue minting coins with the current
metal content, with each new penny and nickel we
issue, we will also be contributing to our
national debt by almost as much as the coin is
These losses are mounting rapidly, and with
commodity prices forecasted to stay near
existing levels for several years, we need to
act immediately to give the Mint the flexibility
to lower the costs of producing the penny and
Commodity prices have instead fallen. Minting
the penny and nickel was a huge money losing
prospect for nearly two years. That’s no longer
the case, at least for now.
With the prospect of little or no present day
monetary savings in the bill’s passage, the
restrictive, micro-managed version of H.R. 5512
that passed in the House, and congressional
resistance in enabling the U.S. Mint to
proactively modify the composition of pocket
change, it would now seem less likely the bill
will pass the Senate.
Unfortunately, this cycle is likely to repeat
The best measure would be amended or new
legislation where the Mint has the flexibility
to modify coin compositions much like the Royal
Canadian Mint can.
If coins can be produced from different alloys
to look the same, retain their quality, and work
in vending machines — and they can — why not
write legislation with guidelines the Mint can
use to manufacture circulating coins with
quality AND profits in mind?
If metal "X" is cheaper, use it in coins. If
metal "X" skyrockets in price and "Y" becomes
less costly, why not switch?
Congress is in the middle of a five-week
vacation and will not return to work until