Monday, May 19, 2008

The U.S. House of Representatives Voted to Change the Composition of Penny and Nickel Coins

The U.S. House of Representatives voted on May 8, 2008 to change the composition of penny and nickel coins to less expensive metals. As I have previously discussed, the U.S. Mint currently loses millions of dollars a year on minting costs associated with producing nickel and penny coins. Nickels currently contain 75% copper and 25% nickel and pennies contain about 97.5% zinc and 2.5% copper. Due to the enormous increase in value of commodities, such as nickel, copper, and zinc, over the past few years, the Mint has been losing money by producing these coins and then selling them to banks at face value. A penny currently costs about 1.26 cents to produce and a nickel costs about 7.7 cents to produce.

The U.S. Mint enacted a law making it illegal to melt down pennies and nickels in December 2006 to prevent people from hoarding pennies and nickels and melting them down to profit from the increased value of the metals in such coins. On May 8, 2008, the House of Representatives voted to change the composition of pennies to a copper-plated steel composition and nickel coins to primarily a steel-based coin. The new penny and nickel coins are both projected to cost less than their respective face values, saving the U.S. Mint millions of dollars annually.

The bill still has to make its way through Congress and be approved by the Bush administration. Apparently there are some objections to some of its current provisions, so it is unclear as to when the coin compositions will actually be changed, if at all.

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