New Legislation Seeks Steel Cents & Nickels Immediately

[camtender]

http://news.coinupdate.com/legislation- ... kels-1117/

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, 25% 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.

[cesariojpn]

Now if they would overturn Obama's Dollar Coin ban and ban dollar bills......it'll save us more money.

[barrytrot]

It's funny: When something is definitely broken such as the above, the "solution" the government comes up with is "an expensive 2 year research project".

If any of us here ran either their job or company like the government for 1 week they would lose the job or company. And be a laughing stock among our peers.

When Obama achieves 4-year lame duck status after this next election due to the most expensive CAMPAIGN in the history of mankind be sure that there will be more time-waisting and money-waisitng policies signed every single day.

[jasmatk]

Anyone think we will start some kind of alloy recovery program once the composition is changed and melt ban is lifted?And if so how long after a lift would the US wait to start a recovery program?

[Diggin4copper]

C.A.R.P. citizens alloy recovery program. Join today! For as little as 25 dollars you can enroll in the program at a local bank.

[inflationhawk]

From a sorters standpoint, nothing really changes for pennies, you just might need a new Ryedale. For nickels, this is a bigger deal. Time to go stock up on some nickel boxes!

[ZenOps]

Only steel pennies and nickels?

Pah, we went all the way to steel dimes quarters and half dollars in Canada in 2000, and of this year steel loonie dollars and toonies. There is not a single circulation coin produced in Canada that is not 94% iron composition or so (2011)

Its amazing how bend over backwards we are with our nickel. Seriously - we are even culling the old coins to provide you US peeps with the last ingot we can muster.

[TXBullion]

Anyone think we will start some kind of alloy recovery program once the composition is changed and melt ban is lifted?And if so how long after a lift would the US wait to start a recovery program?

No,
like digging said

CRP
or IRP (industry recovery program

[Copper Catcher]

Let's see...Rep. Steve Stivers is from the 15th District in Ohio

Oh yea Jackson Metals is in the 18th District in Ohio. Interesting and I'm sure just a fluke.

Regardless in the article said: Ohio is one of the three top steel producing states in the country.

Well I guess for Rep. Stivers it does not hurt to have folks gave to your political campaign who happen to work in the steel production industry: $8,000 individual contributions, $13,100 PAC contributions for a total of $21,100 which abet is small out of the $1.8 million but every little bit counts! http://www.usnews.com/congress/stivers-steve/industries

Naw, I'm sure there is no self serving connection what so ever in trying it influence legislation to change the metal content of the penny which I'm all for! It is all 100% genuine concern for the love of country why this is being proposed in the first place.... Just move along please....nothing to see.

[barrytrot]

I am fine with "win-win" legislation. This is a win for the United States and if it's a win for Ohio also, GOOD.

Right now, the situation is lose-lose. For once I hope the United States government chooses win-win over lose-lose. Not likely though. At least until they see the report at the end of 2012, which will most likely say something like, "It costs more to produce cents and nickels than they are worth." Of course, there will be 200+ pages of useless filler to ensure that the 99+ people who have the full time job of running this report (I'm assuming and partially exaggerating) can justify what is one of the most pathetic jobs out there.

[tractorman]

It's funny: When something is definitely broken such as the above, the "solution" the government comes up with is "an expensive 2 year research project".

If any of us here ran either their job or company like the government for 1 week they would lose the job or company. And be a laughing stock among our peers.

I couldn't agree more. Because no other country has ever made such a switch and its a complete mystery whether it would work or not, right? Nothing like reinventing the wheel. Hey, they've got an endless supply of tax dollars, right?

[CU Baker]

The transition to steel will not be that fast, the vending machine co. and the banks, and anyone that has a machine with the magnets will all have to be revamped before they can take the steel coins. So for now lets just keep sorting

[barrytrot]

The transition to steel will not be that fast, the vending machine co. and the banks, and anyone that has a machine with the magnets will all have to be revamped before they can take the steel coins. So for now lets just keep sorting

Other than the "penny candy" things are there vending machines that take either cents or nickels?

And, those things are pretty low tech, are you sure those "penny candy" things fail to work with a Canadian steel cent?

[inflationhawk]

Can you imagine the TD Bank penny arcade once steel cents get in circulation? They'll be rendered useless! The current owners of coin counting machines are the only losers with this bill. Its a boon for the coin counting machine manufacturers. They'll be lots of machines that need replacing.

[barrytrot]

Anyway, my guess is that there is a zero percent chance of anything happening in 2012. Once they have their precious report they will decide to think about a change. I would expect a composition change in 2014. Which is actually somewhat soon, assuming the world doesn't end in 2012.

Once the change occurs, I would say 1 year before nickels are trade-able similar to how copper cents are now. So hoard nickels now and add 50% profit within 3 years or more than 50% if there is rampant inflation. (I'm assuming a sell price of 1.5x and a "true value" of 2.2x-ish at that time based on normal inflation and growth. Just off the top of my head.)

[ed_vantage17]

It may be a good time to invest in the stock of companies that make coin sorters for the vending machine industry.

[inflationhawk]

They're probably all private or part of big conglomerates where the results in this one area won't be enough to meaningfully impact the entire company. I'm all ears though if someone has an idea.

[texcollex]

I think it would be decades before they lift any melt ban. The government can easily pull all as the coins out of circulation themselves and melt them ant time they want, after changing to steel.

You dump all of the coins on a huge conveyor belt and run them under a magnet. Eject those back into circulation and melt the rest.

[slickeast]

From 1942 to 1945, the composition of the nickel was changed to 56% copper, 25% silver, and 9% manganese to preserve more copper and nickel for wartime needs.

REALLY? What is the other 10% of the coin?

[camtender]

The transition to steel will not be that fast, the vending machine co. and the banks, and anyone that has a machine with the magnets will all have to be revamped before they can take the steel coins. So for now lets just keep sorting

I wonder if the magnets can just be removed to make the old machines work going forward.

[CU Baker]

I was thinking more on the lines of all coins going to steel like our northern neighbors. If our government starts with the cent and nichol, the others should follow. It would be great, then I could turn in my steel junk from up north in with out it getting sucked to the side.

[cesariojpn]

The transition to steel will not be that fast, the vending machine co. and the banks, and anyone that has a machine with the magnets will all have to be revamped before they can take the steel coins. So for now lets just keep sorting

I wonder if the magnets can just be removed to make the old machines work going forward.

But that means the computer would have to be reprogrammed and would cost $$$ that the companies would have to do to hundred thousand machines across the nation which would mean they would have to fire some workers and outsource the work to the Chinese.

[Copper Catcher]

In a 1976 study of the penny, the Research Triangle Institute rejected chromium, tin, titanium, copper-aluminum-nickel-zinc derivatives and zinc mixtures. At current prices, none of these would be cost-effective. In practical terms, that leaves two basic metallic groups: an aluminum alloy, which is better, heavier and stronger than the pure aluminum cent proposed in the 1970s, but still expensive, and steel, which is the clear favorite for affordability and security, but poses technical challenges.

The best approach is to meld the two. Aluminized steel is ideal because it is available coiled —squeezed by rollers and then put into a lasso-like form that can be fed directly into a coining press. It would work for the penny and the nickel — and the dime, if it is ever threatened.

http://www.nytimes.com/2011/08/21/opini ... dable.html

In another article:

...Although minting technology has advanced substantially since 1943, and many nations (including Canada) have issued steel coins for decades (usually plated in nickel or other metals,) the U.S. has avoided this metal until now, probably because the large and politically well-connected vending machine industry uses magnetic coin validation technology in its machines. Replacing this stuff would be a real hardship, the industry claims.

Of course, vending machines don't generally accept pennies, so making a steel cent shouldn't affect them. But once we open the "steel coin door," will we ever be able to close it? The way that existing beneficiaries of government contracts have a powerful influence over future policies and legislation via lobbying efforts, it is often very hard to change things once they are set in Washington. Once certain steel providers get those lucrative U.S. Mint contracts to supply the metal and/or coin blanks, they'll fight tooth and nail to increase the Mint's use of their products.

http://coins.about.com/b/2008/05/09/us- ... t-bill.htm

[cesariojpn]

...Although minting technology has advanced substantially since 1943, and many nations (including Canada) have issued steel coins for decades (usually plated in nickel or other metals,) the U.S. has avoided this metal until now, probably because the large and politically well-connected vending machine industry uses magnetic coin validation technology in its machines. Replacing this stuff would be a real hardship, the industry claims.

Show of hands: Have you ever seen a/or used a vending machine that accepts pennies within the past 18 months??

[barrytrot]

As the person that mentioned vending machines clarified they were thinking of the dime/quarter change. That change can easily wait. Nickels and cents can be changed with nearly no impact on society other than making hoarding nickels a heck of a lot better (until the new ones start to come at least!)