Global Coinage Cost Reduction
29 Aug 2014
The Royal Mint's Director of Circulating Coin Andrew Mills was recently invited to provide expert testimony to the US House of Representatives Subcommittee on Monetary Policy and Trade on June 11, 2014 in Washington, DC. The topic of the hearing was “The Production and Circulation of Coins and Currency.” As The Royal Mint is the world's leading export mint, making coins and medals for an average of 50 countries every year, U.S. Federal Lawmakers were very interested to hear of The Royal Mint’s work to control the cost of producing circulating coins.
Mr. Mills appeared as part of a governmental panel, which also included: Mr. Larry R. Felix, Director, Bureau of Engraving and Printing, U.S. Department of Treasury;
Mr. Richard A. Peterson, Deputy Director, United States Mint, U.S. Department of Treasury; and Ms. Lorelei St. James, Director, Physical Infrastructure Issues, Government Accountability Office.
In his opening statement, Mr. Mills highlighted The Royal Mint’s license free aRMour® plating technology which replaces expensive solid alloy coins with a mild steel core electroplated with either nickel, brass or copper. This single layer or mono plate of typically 25 microns allows for a lifetime in circulation in excess of 20 years. In contrast, multi-layer plating has a thin outer layer of only 6 to 9 microns that can wear through in as little as five years in circulation, exposing the underlying copper layer.
Mr. Mills went on to outline the cost controls that The Royal Mint has implemented on behalf of HM Treasury since decimalisation in 1971, which included:
- Demonetisation: the decimal halfpenny ceased production in 1984, in the last year of full issuance 191 million were made at a metal cost of £1.4m. This cost became non-recurring.
- The conversion of solid alloy coins to full-plated coins: in 1992 the 1p and 2p coins were converted from bronze to copper-plated steel. The metal cost saving since this change has been £281m. To provide a sense of the scale difference between US demand and that of the UK and comparing the US 1c with the UK 1p, since 1992, The Royal Mint has made 13bn 1p coins and the US Mint has made 190bn 1c coins. In 2009 HM Treasury announced that the 5p and 10p would be converted from cupro-nickel to aRMour nickel plated steel. This change has saved £21m in metal costs.
- Reduction in coin sizes: in 1992 the cupro-nickel 5p and 10p were reduced in size, these changes saved £135m in metal costs. In 1997 a smaller 50p coin was introduced saving £29m
- The Pro Active Replacement Programme: The 2012 Autumn Statement announced the active withdrawal of the cupronickel 5p and 10p coins from circulation. In the first year of operation it delivered £15m of benefit to HM Treasury via an extensive Alloy Recovery Program.
Members of Congress at the hearing included Subcommittee Chairman John Campbell, Ranking member William Lacy Clay, and Congressman Steve Stivers. Congressman Stivers has introduced H.R. 1719 (Cents and Sensibility Act ) to lower the cost of producing pennies, nickels, dimes and quarters by ensuring they are minted with steel instead of minerals imported from outside the United States.
The Royal Mint’s experience in introducing a new coin as well as their technological advancements in coin production were key factors for why they were invited to provide their expertise to U.S. Federal Lawmakers as they consider what the U.S. can do to lower the cost of producing coins.
The Royal Mint is one of the world’s oldest and most venerable organisations, with an unbroken history of minting British coinage dating back over 1,000 years. Though more than ten centuries have passed since then, The Royal Mint’s reputation for both quality and integrity has always endured. The Royal Mint is the world's leading export mint, with capacity to make five billion pieces a year supplying struck coins and blanks to 47 central banks and Mints around the world in addition to supplying tooling, metal recovery services and consultancy to these customers.