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Last Updated: Wednesday, 12 April 2006, 10:59 GMT 11:59 UK
How much is a penny worth?
The Magazine answers...

Penny coin
"Copper" coins are made from steel
Rising metal prices could mean that United States one cent coins become worth more as metal than for their face value. Could that ever happen in the UK?

The soaring prices of zinc and copper have prompted fears in the US over the future of its one cent coin.

If the scrap value of the coin, which is made from these two metals, exceeds its nominal value then it becomes an unsustainable arrangement. It would be like selling fivers for 4.95.

So what will happen if the price of these metals continues to accelerate upwards? And could anything similar happen to coins in the UK?

Yes, it could happen here, is the answer from Lawrence Chard, of Chard coin dealers. And that's not just speculation because it's happened before.

"Copper" coins in the UK will not be affected directly by increases in zinc and copper - because the one and two pence pieces are made from copper-plated steel.

Steel coppers

These steel coins were introduced in 1992 - which is why some penny coins are magnetic and some are not, depending on when they were produced.

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"There wasn't much attention paid when they were introduced - but if the cost of producing coins is going to exceed their value, then there will have to be economies.

"They could have been honest and left them looking like steel," he says. And Mr Chard predicts that over time the coins will begin to look more grey.

Small-value euro coins are also made from plated steel, with their shiny coating made from an alloy of bronze and brass (confusingly known as "Nordic gold").

In the US, the issue is the steeply-rising cost of zinc. Cent coins were once almost entirely made from copper - but the increasing copper price meant that in 1982 they switched to being made from 97.6% zinc and only 2.4% copper. The changeover to cheaper metals brought annual savings to the US Treasury of around $25m (14m). If zinc becomes unaffordable, expect further changes.

Gold standards

But the UK's currency system is not immune from such shifts in metal values. And Mr Chard says that if the price of steel increased sharply, then the UK's small value coins could also face similar problems.

One cent coin
US cents are made from increasingly-expensive zinc

So what would be the response? The same as it has been for hundreds of years, says Mr Chard. Reduce the proportion of the expensive metal, switch entirely to a cheaper metal or withdraw the coin.

King Henry VIII was nicknamed "Old Coppernose", says Mr Chard, because when the supposedly "silver" coins of his reign began to wear down a copper colour showed through, revealing how much the silver content had been debased.

"The old gold sovereign was nearly equivalent to its metal value," says Mr Chard, so the coin's purchasing power reflected the weight and cost of its gold.

And this linkage survived until the years following the First World War - when it became no longer viable to put gold into the currency.

Silver lining

Copper, in an unalloyed form, hasn't been substantially used in "copper" coins in the UK since the 19th Century, being replaced by successively cheaper alternatives.

Lawrence Chard says the next metal to be used in pennies could be aluminium, or else the small coins could be withdrawn altogether.

Copper, in the form of cupro-nickel, does still survive within the currency, but within the coins which we call "silver", such as the 10 and 50 pence pieces, which are made from 75% copper and 25% nickel.

The pound coin, since its launch 23 years ago, has been made predominantly from an alloy of nickel and brass.

The last time silver was used in coins was 1947, says Mr Chard, when the rising price of the metal made it unviable to include in one and two shilling pieces.

There is no escaping the economies of coin manufacture, he says, when it is such a massive production process. The Royal Mint produces more than 530 million penny coins and 230 million two pence pieces each year - and they can't be worth more as scrap than their spending power.

Add your comments on this story, using the form below.

I save any of the real bronze (pre mid-80s) coins I get in my change to melt down as a handy and cheap source of bronze for metal casting. (It's not an offence before someone starts)
Ian, Coventry

I believe the 1p coin is most commonly used to give change for products costing x.99. Why not instead just create a 99p coin and then one can greatly reduce the number of 1p coins in circulation. The value of the materials comprising a 99p coin would not surpass the face value of the coin, so all will be well with the world.
Tom Steuart-Feilding, Bristol

Probably the best solution would be to follow the example of Australia and abolish the 1p & 2p pieces, rounding totals up or down to the nearest 5p
Paul Dymond, Leeds

Interesting article, Japan already has aluminium coins, well the 1 Yen coin anyway and if you have a bunch of them they really do feel like monopoly money. We should perhaps push towards electronic money via cards.
Michael Pearce, UK

This is not surprising - since the value of money has long stopped being referenced against anything of material worth and is simply numbers on a screen nowadays. I just can't wait until I stop having to count up bags of pennies every couple of months from all of those 99p items...
Stuart Jones, Reading

I'd be happy to see 1 and 2p coins phased out. They're annoying, you can't really buy anything with them and transactions are increasingly not cash-based. When you do need to pay cash - a system of rounding up the total (like in Australia) would work fine.
Darren Miller, Farnham

The sooner we move to a cashless society the better. Coins are too easy to lose, one never seems to have the right change, they wear holes in ones pocket and are heavy when you have a significant number to carry.
John Cooper, Warrington

Our local shop has been charging two-pence for a penny chew for ages!
Chris Atherton, Stockport

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