Two bills were introduced in the House of Representatives on December 15, 2011 which seek to immediately alter the metallic composition of the one cent and five cent coins. Although the text of the bills is not yet available, statements released by Rep. Steve Stivers who introduced the bills H.R. 3693 and H.R. 3694 indicate that the legislation would require the coins to be made from steel.
“This legislation is a common-sense solution to decrease the cost of minting pennies and nickels,” said Stivers. “Not only will it cost less, but steel is an American resource that we have and can manufacture right here in our backyard.”
Since 2006, the cost to manufacture and produce both the cent and nickel have exceeded their face values. Based on the most recent information from the US Mint’s 2010 annual report, the costs were 1.79 cents for each cent and 9.22 cents for each nickel. The total losses related to producing cents and nickels from 2006 to 2010 are $243.1 million.
Under existing law, the Secretary of the Treasury may prescribe a composition of copper and zinc for the one cent coin. Currently, the coins are struck in copper plated zinc with a net composition of 97.5% zinc and 2.5% copper. The five cent coin is currently required under law to consist of an alloy of 75% copper and 25% nickel.
The bills introduced by Stivers would require both coins to be made from steel, with the penny coated in copper. According to Stivers, the appearance of the coins would not change, just the materials to make them.
Both the cent and nickel have undergone radical changes in composition during the last century. In 1943, the cent was struck in zinc plated steel due to wartime needs for copper. This change was only temporary. In 1982, the composition of the cent was permanently changed from the previous 95% copper and 5% zinc to the current copper plated zinc composition. From 1942 to 1945, the composition of the nickel was changed to 56% copper, 35% silver, and 9% manganese to preserve more copper and nickel for wartime needs.
In light of the higher cost of base metals in recent years, there have been some legislative attempts to further alter the composition of cents and nickels. In 2008, a bill was introduced seeking to require the cents to be immediately produced primarily from steel treated to impart a copper color. The same bill called for five cent coins to be produced in nickel coated steel or an alternative metallic content within a two year time frame. The bill was passed in the House, but ultimately did not become law.
At the end of 2010, a bill was passed and signed into law which provided the Secretary of the Treasury with the authority to conduct research and development activities related to coinage materials. At the end of a two year period, a report is due to Congress, which may make suggestions for alternative coinage materials. The first report is required before December 14, 2012. Any actual changes in composition resulting from the report would need to be made through legislation passed by Congress.
The two bills introduced yesterday by Rep. Stivers have been referred to the House Committee on Financial Services. Each bill is cosponsored by two Ohio Representatives, the state from which Stivers also hails. Ohio is one of the three top steel producing states in the country.