The cost of making a penny in the US is now higher than its face value due to the increased cost of materials. The US Mint is considering changing the composition of the coin or eliminating it altogether. The nickel also costs more to make than its face value, while dimes and quarters cost less. The Mint may need to make tough decisions to address the issue. Steel pennies were produced in 1943 during wartime.
As of 2011, it costs 2.41¢ US (or $0.0241 US dollars (USD)) to make a cent, making the coin’s face value lower than its actual value. The cost exceeded the face value of the cent for the first time in 2006. The increased cost of creating a cent has led to a serious reconsideration of the cent’s composition at the United States Mint, the government agency responsible for printing of money and the minting of new coins.
The cost of a penny is largely dictated by the materials used to make it. The pennies contain 97.5% zinc, with 2.5% copper to give them their characteristic coppery colour. The prices of these metals increased dramatically in the early 21st century, in response to market demands and increasing regulation of mining, which made the cost of mining the metals much higher.
The obvious solution to making a penny cheaper is to change the composition of the currency, integrating cheaper metals or perhaps even plastics, as is done with some European currencies. Attempts to change the dime’s composition have met with some opposition, however, as some people are concerned that changes in materials could change the look and feel of this iconic American coin. Others have suggested it might be time to do away with the 1¢ piece altogether, a decision that would surely change the way Americans do business.
In addition to the dime, nickel also has a physical value greater than its face value; the nickels cost about 11.18 US ¢ to make. Other currencies, such as dimes and quarters, cost much less to make. The face value of a quart may be 25¢ US, but it costs only 11.14¢ US to make one. The relatively high cost of making a dime or nickel is balanced by the lower costs of producing other coins, according to some people.
The change in commodity prices will continue to drive up the price of making pennies. The cost of production is unlikely to ever fall below 1¢, and with more pennies being earned each year, the Mint may face some tough decisions. Like other government agencies, the Mint is expected to be financially responsible, and the business practice of distributing something with less value than its cost of production is not very robust. Whether the Americans like it or not, this means that the penny and the nickel could undergo modifications to address this problem.
Changing the cent would not set a precedent; in 1943, the mint minted steel pennies, in response to the wartime demand for copper.
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