US Mint releases report on alternative metals

[HPMBTT]

Well, we knew it was coming. I figured I would post it in the penny section, since most of us have an avid interest in pennies. So first, here are a few links, followed by some text. Feedback, anyone? I'm sure there will be plenty. Post away!

http://news.coinupdate.com/us-mint-repo ... arch-1765/

US Mint page here: http://www.usmint.gov/about_the_mint/?a ... nialreport
US Mint report here: http://www.usmint.gov/about_the_mint/PD ... r_2012.pdf

Current Technologies Corporation company report from August 2012: http://www.usmint.gov/about_the_mint/PD ... 1_2012.pdf

Here's the text from the Coinupdate link:

The United States Mint has issued the first biennial report to Congress required under the Coin Modernization, Oversight, and Continuity Act of 2010. The report includes an analysis of the production costs for each circulating coin, the findings of an alternative metals study, and Mint's recommendations with regards to potential changes in coin composition.
After a "thorough and meaningful" research and development study that took nearly two years to complete with an outside consultant, the US Mint has indicated that additional work is required before recommendations can be made for any specific changes in coin composition of methods of coin production.

Trail strikes for cent on aluminized steel and copper plated steel
Production Cost Analysis

The production cost analysis provided by the Mint indicates that both the cent and nickel cost more than their respective face values to produce and distribute at 2.00 cents for each penny and 10.09 cents for each nickel. The costs for the remaining denominations remained below their face values at 4.99 cents for the dime, 11.30 cents for the quarter-dollar, and 21.11 cents for the $1 coin.
The cent is currently struck in copper plated zinc with metal content consisting of 97.5% zinc and 2.5% copper. Under current law, the Secretary of the Treasury has the authority to vary the copper and zinc alloy used for the one cent coin.

Steam corrosion tested one cent trial strikes on aluminized steel
The nickel is struck in 75% copper and 25% nickel. The dime, quarter dollar, and half dollar are struck in 91.67% copper and 8.33% nickel. The specifications for the nickel, dime, quarter dollar, and half dollar are specified under the Coinage Act of 1965.
The composition of the $1 coin consists of 88.5% copper, 6% zinc, 3.5% manganese, and 2% nickel. Under current law, the Secretary of the Treasury has the authority to select the composition of the dollar coin, as long as it has similar metallic, anti-counterfeiting properties as United States coinage in circulation.
Research and Development Study

Under the Coin Modernization, Oversight, and Continuity Act of 2010, the Secretary of the Treasury was given the authority to conduct research and development activities on all circulating coins. Working on behalf of the Secretary, the United States Mint contracted the services of Concurrent Technologies Corporation (CTC) to commence research and development activities and deliver a report.

Trial strikes for five cent piece using multi-ply-plated steel and unplated copper alloy
The efforts of the US Mint included the construction of a dedicated R&D laboratory at the Philadelphia Mint which conducted trail strikes and evaluations on 29 different metallic formulations. The evaluations consisted of tests for hardness, ductility, weight, color, surface finish, coinability, corrosion and wear resistance, electromagnetic signature, supply chain availability, and cost.
CTC and the US Mint also conducted significant outreach to the public and key stakeholders to determine their principal concerns for alternative materials and potential costs for changes.

Wear tested five cent trial strikes on unplated copper alloy
Alternative materials evaluated for the cent included aluminized steel, aluminum, copper-plated steel, and stainless steel. Materials evaluated for the 5 cent coin and quarter dollar included dura-white-plated zinc, multi-ply-plated-steel, stainless steel, nickel plated steel, and copper based alloys. Materials evaluated for the $1 coin included plated zinc and copper based alloys.
The alternative material candidates were classified as two different types. First, seamless candidates which had approximately the same electromagnetic signature and weight as the incumbent coins. These candidates would provide for a modest cost savings to the Mint. Second, non-seamless candidates with a different electromagnetic signature and/or weight than the incumbent coin. These would provide a larger cost savings to the Mint, but may result in significant conversion costs for the private sector to upgrade coin processing equipment.
Recommendations

The United States Mint's report to Congress indicates that the Mint must perform additional work before it has sufficient information to recommend possible new metallic materials or other changes to coin production. The report specifies that the Mint needs to: "(1) conduct production scale tests with multiple lots of proposed coin materials to verify the potential supply chains and the results from the preliminary tests described in the CTC study, and (2) further research estimated stakeholder costs associated with a change in electromagnetic signature."
While this was the overall recommendation of the Mint, the report from CTC offered some specific recommendations for consideration by the United States Mint, which included the following:
Maintain coin dimensions (thickness and diameter) for all future coins regardless of materials of composition since the conversion coins for coin processing equipment would be too large to justify any changes.
Maintain the current materials of construction for the cent. After accounting for metal and production cost, copper plated steel one-cent coins would offer no cost savings compared to the current composition of copper-plated zinc. Aluminum alloys were fond to jam or destroy coin acceptance or coin handing equipment, removing this composition from consideration.
Further develop copper based alloys for the composition of the nickel. Although these alloys would not bring costs to parity with face value, they would produce material cost savings. The alloys considered have a yellow cast color or golden hue color. The US Mint would achieve an annual cost savings of up to $16.7 million based on March 2012 metals pricing and 2011 production rates. There would be conversion costs for private sector coin acceptance equipment ranging from an estimated $11.3 million to $56.4 million depending on the alloy selected.
Consider copper based alloys for use in the dime, quarter dollar, and half dollar coins. The US Mint would achieve an annual cost savings of approximately $2.2 million annually for the quarter dollar and $3.9 million annually for the dime based on March 2012 metal pricing and 2011 production rates. There would be conversion costs for private sector coin acceptance equipment estimated at $9.20 million for the quarter and $6.92 million for the dime. It was noted that one of the copper alloys had a slight yellow cast, which might cause confusion between the quarter and $1 coin.
Maintain the current composition for the $1 coin, as none of the alternative material costs showed an improvement in cost.
Continue long range research of surface engineering of zinc or steel for one-cent coin as a useful technology to reduce costs associated with copper plating. The report mentions the example of inexpensive paints or colored particles on bare zinc covered with a wear resistant coating.
Continue research and development on stainless steel as a potential alternative for lower denomination coins. Also continue development of stainless steel alloys clad to copper alloy for higher denomination coinage to mimic the current electromagnetic signature of the dime, quarter, and half dollar.
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[uthminsta]

I got a suggestion.
FIX THE FRICKING ECONOMY.

[creshka46]

I thought it was VERY interesting that their recommendation on the cent was to not change anything because no material would offer a significant cost savings.

[Numis Pam]

I thought it was VERY interesting that their recommendation on the cent was to not change anything because no material would offer a significant cost savings.

yes me too...

[68Camaro]

The result, while ridiculous for the amount of research it took, makes sense. They'll take their losses on the cent for as long as its politically expedient to keep the cent, while trying to improve their position on the nickel (and maybe even the other coins). As noted, their ideal solution keeps the sizes and maintains an electromagnetic signature test, while sacrificing density as needed and maybe compromising on color.

[Morsecode]

"After a "thorough and meaningful" research and development study that took nearly two years to complete with an outside consultant, the US Mint has indicated that additional work is required before recommendations can be made for any specific changes in coin composition of methods of coin production."

Sounds more like typical gov't can-kicking to me. With deficits measured in trillions it's hard to see how savings of millions gets much traction. Not saying it won't, but it just plays out that way.

[ZenOps]

Well, I guess the US will kick the can down the road for another two years. I figured with Obama on final term, he might have simply just converted all the coins to iron cores.

Iron cored nickels are not all that expensive if you have the capacity to produce them. Thing is, you would have to pay a mint worker near $100,000 - thats why a nickel made of $120 per ton Iron would still cost more than 5 cents to make, if it was made of dirt it would still cost more than 5 cents to make.

If its any consolation, you will be getting quite a bit of nickel, copper and zinc from Canada as we melt down ours. Sure Canada only has 1/10th the population of the US, but its still significant enough to allow the US to kick the can for a few more years at least (even if at a loss on every cent and nickel produced)

I might capitulate a few Canadian 1990-1999 cupronickels back into circulation on this news, might as well upgrade them to the 10% heavier US nickels.

[hobo finds]

"I figured with Obama on final term, he might have simply just converted all the coins to iron cores." Not a high priority for him!

[uthminsta]

I think the "what good does saving millions do when the govt owes trillions" thinking is played out now.
Because... as the saying goes...
"Penny wise, pound foolish."
...
...
...
OH! Holy crap, they're not even penny wise!
...
...
We're boned.

[scyther]

So their solution is to put more copper in the already mostly copper nickel? That's dumb. Use iron. For the nickel and the penny. Even if you still have to pay more than face value to make them, at least they won't be melted down. If they're made of copper and zinc, respectively, that could happen with steady inflation and/or a surge in metal prices.

[johnbrickner]

The Canadian budget report for 2012 (March 2012) claims a cost of 1.6 cents (Canadian cents) to produce their copper plated stainless steel penny and so decided to do away with it. I'm missing how the U.S. Govt found no cost savings for the same when the Zinc Lincoln is reported to cost 2 cents (U.S. cents) to produce now. Is the Canadian Mint that much more efficient? If it is, we might be better served to farm out our coin making to Canada. If it is not, then I'm thinking this report along with most else the U.S. govt reports to us, should be considered very carefully.

[scyther]

The Canadian budget report for 2012 (March 2012) claims a cost of 1.6 cents (Canadian cents) to produce their copper plated stainless steel penny and so decided to do away with it. I'm missing how the U.S. Govt found no cost savings for the same when the Zinc Lincoln is reported to cost 2 cents (U.S. cents) to produce now. Is the Canadian Mint that much more efficient? If it is, we might be better served to farm out our coin making to Canada. If it is not, then I'm thinking this report along with most else the U.S. govt reports to us, should be considered very carefully.

Maybe because of costs associated with making the switch.