Alloy recovery program keeps Canadians’ pocket change fresh

Thanks to a little-known program operated by the Royal Canadian Mint, Canadians may have the newest coins in their pockets at any time since Confederation.

Called the alloy recovery program, it is system where older-composition coins are culled out of circulation and replaced with new versions. The old coins are mutilated and then melted for the value of the metal, mostly nickel for most coins.

The program was instituted in 2004, shortly after the introduction of plated-steel coins. It was introduced for the recovery of coins from five cents through to 50 cents. While the older five-cent coins were struck in cupro-nickel, the other values were all solid nickel.

The program also solved a problem for the vending industry, as the newer coins were slightly lighter than the old nickel pieces. That meant machines had to be calibrated with broader tolerance for differences in weight than normal.

For the Mint, the program not only generated revenue in the form of metal sales, but it created demand for new coins to replace those removed from circulation. The revenue from making replacement coins was not particularly large, but it did allow the Mint to keep presses running. In the 2013 annual report, the Mint said the program “generated capacity that could be used for foreign orders.”

The success of the program means that very few coins more than 10 years old remain in circulation.

The last time such a situation may have occurred was 1867, when the new nation of Canada decided to use coins struck for use in Upper and Lower Canada. At that time a large inventory of coins existed, and most had been struck only a few years before, in the 1850s.

The coins were recovered using the coin distribution system, which has since been expanded to include machines such as Coinstar, which collect and sort coins from members of the public. Similar machines have been placed in many Canadian banks.

Because of the difference in weight, it is fairly simple for the system to sort the older coins from the new.
The program concentrated at first on the 25-cent coin, the largest and heaviest coin targeted by the program (aside from the rarely used 50-cent piece). The revenues it generated were considerable, amounting to millions of dollars over the lifetime of the program.

When the one-cent coin was withdrawn from circulation, the program was expanded to include that value. At that time the coin was being produced in two compositions, copper-plated on either zinc or steel cores. It was a timely move for the program, as its success in withdrawing 25-cent coins has meant that few older coins remain to be found.

In 2013, the production of $1 and $2 coins was altered to allow new compositions. The $1 was switched from bronze-plated nickel to plated-steel cores. The compositions of both components of the $2 coin were converted to plated steel. The change made the coins less expensive to produce, along with making them compatible with the Mint’s cyanide-free plating process. At the same time the designs were modified by the addition of new security features such as edge engraving and micro-engraved maple leaves on the reverse. Again, there were also minor differences in weight.

The same year, the program was modified yet again, this time to include recovering the older pattern $1 and $2 coins.
Inevitably the program will again run low on these coins, but the Mint has not announced plans to scrap the program. Its impact on the bottom line, and on Canada’s circulating coins, will wane. Unless of course, another metallic change takes place.

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