The cost for the United States Mint to manufacture and distribute the cent and nickel fell for the second consecutive year. Nonetheless, costs remained well above the respective face values of the two smallest circulating denominations.
For the fiscal year ending September 30, 2013, the unit cost for the Mint to produce and distribute the cent was 1.83 cents and the unit cost for the nickel was 9.41 cents. This compares to costs from the prior fiscal year of 2.00 cents and 10.09 cents, respectively. Lower metal costs and lower selling, general and administrative expenses contributed to the decline in unit costs.
The cent is currently struck in a composition of 2.5% copper and 97.5% zinc with a weight of 2.500 grams. The nickel is struck in 25% nickel and 75% copper with a weight of 5.000 grams. During the fiscal year, the average daily market prices for copper, nickel, and zinc had declined by 4.2%, 11.7%, and 0.7%, respectively.
Selling, general, and administrative expenses allocable to the cent and nickel declined by 17.6% and 15.5%, respectively, compared to the prior fiscal year.
Unit Cost to Produce and Distribute the Cent
|FY 2013||FY 2012|
|Cost of Goods Sold||0.0156||0.0163|
|Sales, General & Administrative||0.0025||0.0034|
|Distribution to Reserve Banks||0.0002||0.0003|
|Total Unit Cost||0.0183||0.0200|
Unit Cost to Produce and Distribute the Nickel
|FY 2013||FY 2012|
|Cost of Goods Sold||0.0805||0.0829|
|Sales, General & Administrative||0.0131||0.0173|
|Distribution to Reserve Banks||0.0005||0.0007|
|Total Unit Cost||0.0941||0.1009|
During the 2013 fiscal year, the US Mint produced and shipped 6.610 billion cents and 1.123 billion nickels to Federal Reserve Banks. Since the costs of the two denominations exceeded their face values, the cent generated a loss of $55 million and the nickel generated a loss of $49.5 million. These figures represented a slight improvement from the prior fiscal year when the cent had generated a loss of $58 million and the nickel had generated a loss of $51.2 million.
This is now the eighth consecutive year that the cost for the two lowest denominations exceeded their face values. From 2006 to 2013, the collective loss to produce and distribute the cent and nickel has now reached $573.50 million.
|Fiscal Year||Cent Unit Cost||Nickel Unit Cost||Seigniorage (millions)|
Despite the losses generated by the cent and nickel, the US Mint has generated positive seigniorage across all circulating denominations for each of the years. This is the result of the gains from the higher denominations, which are produced for less than their face values, more than offsetting the losses from the lower denominations.
During fiscal 2013, the production of the dime and quarter generated seigniorage of $103.5 million and 154.1 million respectively. After accounting for a loss of $15.7 million from mutilated and other coinage, the US Mint's circulating coin segment generated an overall gain of $137.4 million.
Under the Coin Modernization, Oversight, and Continuity Act of 2010, the US Mint is authorized to perform research and development activities with regards to alternative metallic materials for circulating coinage and provide recommendations for potential changes. In the first required biennial report to Congress, the Mint indicated that additional time was necessary before offering any specific recommendations. The Mint continues to research, develop, and test potential alternative materials as well as analyze the estimated costs to stakeholders associated with potential alternative materials. The next required report is due by the end of 2014.