U.S. Mint Purchases Metals for Coin Production

There was a minor announcement issued by the US Mint on March 16 regarding the purchase of non-precious metals. According to the announcement, the Mint had just purchased the enormous figure of 3,600 tons of zinc, 1,938 tons of nickel and 18.3 million pounds of copper.

You might ask, "What on earth is the Mint going to do with all that metal and why would it purchase it?"

When you ask the average person to envision what goes on inside the Mint, most people -- including coin collectors -- will envision blanks being fed into high speed coining presses, being stamped and spit out into buckets as finished coins ready to be shipped to the Federal Reserve Bank.

There is a lot more to the minting process than this. The purchase of zinc, copper and nickel has a lot to do with that process. The Mint doesn't buy metals on a daily basis, but it does watch for price fluctuations in order to buy when prices are favorable. Sometimes this can be a problem.

Due to the price of metal and cost of processing it into blanks, there have been situations where the cost of producing a coin almost exceeded the face value of the finished product. The Mint relies on seignorage, the difference between the price of manufacturing a coin and its face value, to show a profit. The exorbitant price of silver forced the United States to abandon silver for our circulating coins beginning in 1965.

There have also been critical moments when metals were not available. At one time, our large and half cent coins were made from scrap metal obtained from barrel hoops.

Gold and silver have often been taken from the government's strategic reserves, rather than purchased metal on the open market. Recent reports indicate the strategic reserves of silver are quickly becoming exhausted, which is another problem the Mint will have to face as it continues to strike non-circulating legal tender coins comprised of that metal.

Buying the metal is only part of the job. Some planchets from which our coins are struck are purchased from outside vendors. Most are made inside the Mint as part of the manufacturing process.

Metals, precious or otherwise, are stored in ingot form at the Mint or nearby facilities. The ingots are heated, then placed on a rolling machine and rolled out into a long strip of a specific thickness before these strips are placed into a punch machine, which produces the blanks used for coins. This is an exacting process, as the finished coins must be of a specific thickness as well as weight and diameter. Precious metal coins must also meet a specified purity.

The rolling process is not simple. You don't just take an ingot and roll it once through the rolling machine to get what you want. It takes many turns through the machine before the metal spreads out enough to begin to reach the desired thickness. As the metal is rolled, it heats from the process. This also makes it more difficult to handle. Once properly rolled out, a simple ingot becomes so long it is necessary to roll the finished sheets for storage until they are needed for blanking.

Should the rolled metal fail to meet tolerance, it has to be melted and the entire process repeated. Once blanks have been punched from the strip (called the "blanking process"), the leftover scrap from the strip is melted anyway and used over again through the same process.

That's a lot of work!