The E-Sylum:  Volume 7, Number 29, July 18, 2004, Article 15

NEW COMPOSITION FIGHTS "NEGATIVE SEIGNIORAGE'

  Dick Johnson writes: "A joint press release this week from
  the Royal Canadian Mint and a metal supplier, Alltrista Zinc
  Products Company of Greenville, Tennessee, announced a
  new metal composition for low value  coins, which is called
  "multi-ply plated steel ... with inclusion of zinc." This is a
  proprietary coin  composition of the Canadian Crown
  Corporation. It has a nickel gray color.

  The release also contained a new phrase - "negative
  seigniorage."  It is obvious what the term  means - its metal
  cost and manufacturing costs are greater than a coin's
  denomination - and that's ideal for the term's clear meaning.

  Iron and zinc are two of the world's least expensive coinage
  metals, aluminum is another.  Alltrista president Albert Giles
  made the announcement his firm's ability to manufacture the
  new coinage composition for the Canadian Mint.  The
  composition is not for Canada's coins, said an  Alltrista
  spokesperson, but for coins of low value for foreign countries
  to be struck by the Royal Mint.

  Giles further stated "With the price of metals increasing
  dramatically over the past year and metal  availability being
  an issue, zinc offers many countries the opportunity to retain
  their lower  denomination coins which are in or are under
  threat of negative seigniorage while maintaining the prestige
  of a quality coin."

   "Economically," he emphasized, "lower denomination coins
  are essential in curtailing the pressures of inflation." His firm
  had developed an aluminum plated zinc coinage composition
  two years ago that has been employed for the coins of
  Columbia.

  Economic pressure of rising metal costs will continue to
  create potential negative seigniorage for  the lowest
  denomination coins of all countries. American coins are not
  immune to this effect.  The present U.S. cent composition of
  copper coated zinc -- Alltrista is one of two American firms
  which had supplied this metal since 1982 and now the leading
  supplier-- is getting closer to  "negative seigniorage" every
  year as metal costs rise.

  This may be leading to abolishing the copper color cent.
  (Would it have to be replaced by a solid  aluminum cent,
  or an aluminum coated zinc composition?)  Yet a Harris
  poll, also released this  week, states that Americans
  continue to oppose abolishing the cent denomination 59
  to 23  percent (with 18% not sure).

  Not only is metal cost a factor for any new coin composition,
  but scrap technology must also be  considered. Coins do not
  remain intact forever, most are reclaimed for their separate
  metal  components. America's copper coated zinc was a
  brilliant choice in 1982, since it can be melted  and easily
  reformulated into brass.

  It is yet to be seen how the new Canadian composition for
  coins can be scrapped for its two core metals, iron and zinc.

  The joint release mentioned can be found at:joint release

  The Harris poll on possible cent abolishment is at: Harris Poll

  Wayne Homren, Editor

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