Love it or hate it, the cent costs more than a penny to produce – 2.41 cents to be precise – and that makes for a poor return on investment.
So does the cent have a future as a circulating coin in the U.S.?
“Here’s the offical party line,” said U.S. Mint Deputy Director Richard A. Peterson in a telephone interview. “That’s a policy decision and the Mint does not set policy, it executes policy.”
Congress sets policy.
So if the Federal Reserve Bank orders cents, the Mint will produce them, he said.
But recognizing the cost issue, and in response to a directive from Congress to report on coin production by the end of the year, the Mint has been actively working on ways to reduce production costs.
“Our research and development effort is looking at bringing down cost, but it’s too soon to call on the penny,” Peterson said.
“The law requires us to look at metals only, minimize the impact on the vending machine industry and consider the cost impact of implementing new formulations,” Peterson said.
So the Mint is looking at coin size, weight, electromagnetic signature and capital costs of changing formulations such as the need for new equipment.
Trial strikes have been made to see if some new materials will produce a coin that will stand up, he said.
“Then we need wear testing and preproduction runs to confirm our costs are still in the ballpark of our original estimates,” Peterson said.
Once that’s done, the Mint will then need a full scale production run to test the supply chain, he said.
“There’s a lot of work between here and there,” he said.
It’s not just the cost of the cent that is being looked at. The nickel, dime, quarter and dollar are being examined also.
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“Any cost reduction we can bring into play for the nickel or quarter are important as well,” Peterson said. “We’re looking at all the various alternatives.”
Among them are the use of colored steel, he said.
How about stainless steel?
“I don’t know,” he said. “It’s too soon to talk about.”
As for those trial strikes, a number of coins will be kept to donate to the Smithsonian, he confirmed.