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Canada to mint cheaper steel coins

16 january 2012, 15:53
©REUTERS/Mark Blinch
©REUTERS/Mark Blinch
Canada's mint will soon unveil one-dollar and two-dollar coins made from brass-plated steel, replacing more expensive nickel cores, AFP reports citing the government.

An explanation in the official Canada Gazette said the traditional use in coinage of high cost alloys at volatile market rates has driven up production costs for governments around the world.

"In many countries, the intrinsic metal value of the coins are greater than their face value, leading to coin hoarding activities that reduces the efficiency of the monetary system," it said.

The new coins will be slightly lighter, Can$16 million (US$16 million) cheaper to produce and ship, and harder to counterfeit.

However, the change will cost coin-operated industries up to $40 million to recalibrate vending machines to recognize the new coinage.

The mining sector will also be hit as global nickel demand falls by about 539 metric tonnes per year, or 0.05 percent.

The Royal Canadian Mint has produced more than one billion loonies, as the one dollar coins are called, and over 700 billion toonies, the two-dollar coins, since they were introduced in 1987 and 1996, respectively.

In the Canada Gazette, it cited fluctuations in the price of nickel by more than 1,000 percent on the London Metal Exchange over the last decade for the switch to steel.

"In recent years, nickel prices have been very volatile and have increased dramatically leading to higher production costs," the mint said, noting that nickel is currently trading at four times higher than it was in 2000.

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