The overall price of producing U.S. circulating coins fell for a fifth straight year even as the cost of making cents and nickels remained above their face values for an eleventh year in a row, the United States Mint disclosed in its recently published 2016 Annual Report.
The unit cost to produce, administer and distribute the 1-cent coin totaled 1.50 cents compared to 1.43 cents from a year earlier.
Lower metal prices helped the 5-cent coin with its unit cost easing to 6.32 cents from 7.44 cents in 2015, as did its year-over-year production climb of more than 7%.
"By keeping indirect costs down while meeting increased demand, fixed costs were spread among more units," the Mint’s annual report said.
"Compared to last year, FY 2016 average spot prices for nickel decreased 30.9 percent to $9,264.43 per tonne, average copper prices fell 19.6 percent to $4,766.68, and average zinc prices decreased 10.4 percent to $1,868.28," it added.
Lincoln cents are composed from 2.5% copper with the balance zinc while 5-cent coins are made from 25% nickel with the balance copper.
Obviously, metallic coin compositions are always key cost drivers. The U.S. Mint has studied alternative alloys in an effort to cut costs but viable solutions have proven elusive.
Cost to Make Dimes and Quarters
The U.S. Mint made money on dimes and quarters with their respective unit costs at 3.08 cents and 7.63 cents. These compare to their FY 2015 amounts of 3.54 cents and 8.44 cents.
The following two tables summarize U.S. Mint costs for the cent through quarter, with the first table for FY2016 and the second one for FY2015:
FY 2016 Unit Cost to Produce and Distribute 1c, 5c, 10c, and 25c Coins
|Cost of Goods Sold ($)||0.0131||0.0551||0.0269||0.0672|
|Sales, General & Administrative ($)||0.0017||0.0071||0.0034||0.0080|
|Distribution to Reserve Banks ($)||0.0002||0.0010||0.0005||0.0011|
|Total Unit Cost ($)||0.0150||0.0632||0.0308||0.0763|
FY 2015 Unit Cost to Produce and Distribute 1c, 5c, 10c, and 25c Coins
|Cost of Goods Sold ($)||0.0125||0.0664||0.0315||0.0755|
|Sales, General & Administrative ($)||0.0015||0.0068||0.0033||0.0076|
|Distribution to Reserve Banks ($)||0.0003||0.0012||0.0006||0.0013|
|Total Unit Cost ($)||0.0143||0.0744||0.0354||0.0844|
The two smallest U.S. coins have lost money since 2006.
Unit Costs and Seigniorage for Cent and Nickel from 2005 to 2016
|Fiscal Year||Cent Unit Cost||Nickel Unit Cost||Seigniorage (in millions)|
The U.S. Mint produces and issues circulating coins to Federal Reserve Banks in quantities to support their service to commercial banks and other financial institutions. The year saw production increases in all denominations except for the cent and quarter. The bureau delivered a total of:
- 9.114 billion cents, down 0.5% from the previous year;
- 1.587 billion nickels, up 7.5% from the previous year;
- 3.134 billion dimes, up 9.1% from the previous year; and
- 2.482 billion quarters, down 6.2% from the previous year.
The four denominations combined to 16.308 billion coins, marking a 1% increase over the 16.151 billion coins delivered in FY 2015. The Fed pays face value for each coin they receive, with the Mint resultantly realizing FY 2016 circulating revenue of $1.1042 billion.
Coin Shipments, Costs and Seigniorage
(coins and $ in millions)
|One-Cent||Five-Cent||Dime||Quarter||Mutilated & Other||Total|
|Value of Shipments||$91.1||$78.9||$313.4||$620.8||–||$1,104.2|
After subtracting the year’s cost to produce all four coins, which totaled $525.5 million, the U.S. Mint’s circulating profit or seigniorage reached $578.7 million for a 7% increase over the previous year. The resulting seigniorage per dollar issued reached $0.52, exceeding the prior year’s $0.49.