While Canada recently made headlines with their decision to eliminate their “penny” or one cent coin, the United States has increased production for their smallest denomination. For the first quarter of the year, the United States Mint struck 1.37 billion cents, an increase of 27.75% compared to the year ago period.
Production of the nickel or five cent coin has increased by an even greater percentage. The 274.56 million nickels produced during the first quarter represents an increase of 78.47% above the year ago production level.
US Mint Circulating Coin Production
|1st Quarter 2011||1st Quarter 2012||Change|
The two lowest denominations within the United States have been subject to some scrutiny over the past few years, as the unit cost to produce the coins has far exceeded their respective face values. In the most recent figures, the US Mint reported that it cost 2.41 cents to produce and distribute each cent and 11.18 cents to produce and distribute each nickel.
Production of the cent and nickel generated a loss of $116.70 million for the 2011 fiscal year. However, on an overall basis the production of circulating coinage had remained profitable since the remaining denominations are produced for less than their respective face values. The most recent unit costs by denomination indicate costs of 5.65 cents for each dime, 11.14 cents for each quarter, and 18.03 cents for each $1 coin. Across all denominations, fiscal 2011 circulating coin shipments generated positive seigniorage of $348.8 million.
This year, the situation may prove different following the increased production levels for the cent and nickel combined with the suspension of production for circulation of the Presidential Dollar. The Treasury Department had announced the suspension in December as a cost savings measure, although the production of $1 coins was actually responsible for the majority of the seigniorage generated by the US Mint.
The Mint is currently conducting research and development activities with regards to alternative coinage materials, which could reduce production costs and increase seigniorage. Authority to conduct these activities was granted by Congress under the Coin Modernization, Oversight, and Continuity Act of 2010. The Mint is required to submit a report to Congress with findings and recommendations near the end of this year. Any actual changes in coinage composition would still need to be accomplished through an act of Congress.