How much does it cost to produce a penny?

Answer 1

The cost of a penny is largely dictated by the materials used to make it. Pennies contain 97.5% zinc, with 2.5% copper to give them their distinctive coppery color. Prices of these metals have risen dramatically in the early 21st century, in response to market demands and increasing regulation of mining, which has made the cost of metals extraction much higher.

The obvious solution to make a penny less expensive is to change the composition of the coin, integrating cheaper metals or perhaps even plastics, as is done with some European currency. However, attempts at changing the composition of the penny have met with some opposition, since some people are concerned that changes in composition could change the look and feel of this iconic American coin. Others have suggested that it may be time to do away with the one cent piece altogether, a decision which would certainly change the way Americans do business.

In addition to the penny, the nickel also has a physical value which is higher than its face value; nickels cost around 7.7¢ US to make. Other currency, such as dimes and quarters, costs much less to make. The face value of a quarter may be 25¢ US, but it only costs 10¢ US to make one. The relative high cost to make a penny or a nickel is balanced out by the lower costs of producing other coins, in some people's opinions.

Changing commodities prices will continue to drive up the price to make a penny. It is unlikely that the cost of production will ever fall below one cent, and with more pennies being made each year, the Mint may face some tough decisions. Like other government agencies, the Mint is expected to be financially accountable, and the business practice of distributing something with a value less than its manufacturing cost is not very sound. Whether Americans like it or not, this means that the penny and the nickel may be undergoing changes to address this issue.

Changing the penny wouldn't be setting a precedent; in 1943, the mint coined pennies in steel, in response to wartime demand for copper.