The unit cost for the United States Mint to manufacture and distribute the cent and nickel declined for the third consecutive year. Nonetheless, the unit cost for each denomination remained above its face value for the ninth consecutive year.
For the fiscal year ending September 30, 2014, the unit cost for the US Mint to produce and distribute the cent was 1.66 cents, compared to 1.83 cents in the prior year. The cost to produce and distribute the nickel was 8.09 cents compared to 9.41 cents in the prior year.
The cent is currently struck in a composition of 97.5% zinc and 2.5% copper with a weight of 2.5 grams. Metal costs for the denomination actually increased for the year due to higher spot prices for zinc. The unit cost reduction was driven by increased demand for the denomination which spread fixed costs over more units.
The nickel is currently struck in 25% nickel and 75% copper with a weight of 5 grams. Metal costs for this denomination decreased for the year as lower spot prices for copper offset higher spot prices for nickel. Increased production also served to spread fixed costs over more units.
Compared to last year, the average spot prices for zinc increased 8.4%, nickel increased 3.9%, and copper decreased 6.9%.
Unit Cost to Produce and Distribute the Cent
|FY 2014||FY 2013|
|Cost of Goods Sold||0.0143||0.0156|
|Sales, General & Administrative||0.0021||0.0025|
|Distribution to Reserve Banks||0.0002||0.0002|
|Total Unit Cost||0.0166||0.0183|
Unit Cost to Produce and Distribute the Nickel
|FY 2014||FY 2013|
|Cost of Goods Sold||0.0699||0.0805|
|Sales, General & Administrative||0.0102||0.0131|
|Distribution to Reserve Banks||0.0008||0.0005|
|Total Unit Cost||0.0809||0.0941|
During the 2014 fiscal year, the US Mint distributed to Federal Reserve Banks 7.92 billion cents with a face value of $79.2 million and 1.211 billion nickels with a fave value of $60.5 million. Since the cost to produce and distribute each denomination exceeded its face value, the cent generated negative seigniorage or a loss of $52.9 million and the nickel generated a loss of $37.6 million. During the year, the dime and quarter were produced and distributed for less than their face values. These two denominations yielded positive seigniorage or gains of $135.2 million and $270.5 million, more than offsetting the losses generated by the cent and nickel.
This represents the ninth consecutive year that the cost to produce and distribute the cent and nickel have exceeded their face values. After peaking at a cost of 2.41 cents and 11.18 cents in 2011, the cost for the denominations has shown reductions for each of the past three years.
Historical Unit Costs for Cent and Nickel
|Fiscal Year||Cent Unit Cost||Nickel Unit Cost|
Under the authority granted by the Coin Modernization, Oversight, and Continuity Act of 2010, the United States Mint is currently conducting research and development activities with regards to alternative metallic compositions for circulating coins. In their most recent required biennial report, the Mint concluded that there are no metal compositions that reduce the manufacturing unit cost of the cent below its face value. The Mint tested various alternative compositions for the nickel and has indicated plans to continue tests for an 80% nickel and 20% copper alloy which would yield cost savings and represent a “seamless” material with no appreciable impact on the coin-accepting industry.