Canada plans for even more seniorage from loonies and twoonies

[shirohniichan]

70 cents per dollar profit isn't enough

 

The Canadian government has decided that paying 30 cents to produce each $1 and $2 coin is too much, and it will change the composition of 2011 loonies and twoonies to steel to save on costs.

 

I'm interested to see what the new coins will look like.

[DC Dawg]

The Royal Canadian Mint is 100-percent self-supported crown corporation. A crown corporation is not a government entity but wholly owned by the ruler of the Commonwealth Realm, in this case Queen Elizabeth II. By royal decree and law, the RCM is the only company allowed to manufacture legal tender coins for Canada. Business strikes are sold to the Canada central bank for use by the public. There are some programs that the RCM sold separately without going through the central bank. One of these was the pink ribbon quarter a few years ago.

 

Although you may think that the seigniorage may be a lot, the RCM has to balance the costs with the lower denomination coins. The RCM loses money on both the 1-cent and 5-cent coins, a situation we know about there in the US. But rather than looking at the two denominations equally, Canada looks at the overall bottom line to see that with capital improvement, bonds used to new construction and new equipment, the RCM has to increase its seigniorage in order to meet its debit obligations. Also, with the rise in precious metals prices, the RCM needs additional money in order to purchase metals on the open market.

 

The last RCM annual report I have is the 2007 summary report that states the RCM made 25-percent in profit. However, the report does talk about future debt obligations that begin in 2010 related to the Winnipeg facility. Although the report does not mention it, those who have read the reports in the Royal Canadian Numismatic Association (RCNA; I am a member), the mint at Winnipeg was upgraded and now includes planchet making equipment using a new plating process developed by the RCM to plate metals. The goal is to lower the costs of producing planchets for business strikes. The 2008 cents are copper plated steel cents produced in Winnipeg.

 

Winnipeg does produce medals, specimen sets, and trial/test strikes. The RCM does sell these at a premium.

 

Finally, please remember that the RCM does not produce coins in the same volume as the US Mint. The RCM produced 37 million Loonies and 25 million Toonies in 2006 (last year I have numbers for). Canada does not produce C$1 and C$2 notes. In comparison, the Bureau of Engraving and Printing reported that in FY2006 they produced 4.5 billion $1 notes and 230 million $2 notes--and think about it, the $2 notes don't circulate much!

 

Scott