It now costs 1.6 cents to produce each US one cent coin due to the high price of zinc, which makes up 97% of each coin, according to the Wall Street Journal. President Obama has proposed phasing out pennies and nickels (5-cent pieces) on numerous occasions, including in the 2015 budget, but Congress has yet to bite. The Canadians stopped producing their one-cent coin in 2013 for the same reasons.
Why have Americans not gotten around to stop making something they barely use? “It’s one of those things where I think people get attached emotionally to the way things have been,” Obama said earlier this year. “We remember our piggy banks and counting out all the pennies and then taking them in and getting a dollar bill or a couple of dollars from it and maybe that’s the reason people haven’t gotten around to it.”
The penny actually is slightly cheaper to make this year; the US Mint lost $55 million producing pennies in 2013, when the coin cost 1.8 cents to make, before the Mint found savings elsewhere in the manufacturing process to bring costs down. Zinc is used in every aspect of modern life but is especially instrumental in steel-making, where its rust-proof qualities really shine. The demand for zinc is rising as it appears we’re starting to run out of the metal. Some of the world’s biggest zinc mines look to be winding down, and Goldman Sachs says production is expected to fall short of demand this year for the first time since 2007:
The irony is that at the same time as the government tries to get rid of pennies and nickels, the US Treasury has been trying to get people to use $1 coins—with little success. The Federal Reserve has been minting the $1 coins since 2007 and is expected to hold $2 billion of them by 2016, leading to enormous storage costs. Using a $1 coin instead of a bill could save the $700 million per year because the coins last longer, the government says. But for all sorts of cultural and historic reasons, Americans just won’t use them.