RCM Monopolizing 1-Cent Coins|
September 16, 2013
A direct mail promotion recently sent to about 1,200 contacts for IBM Canada reads, “Can you keep track of every cent? We can.”
One of the billions of now obsolete Canadian 1-cent coins is attached to each mailer. A non-functional simulated blinking red light is attached to the back of the coin with adhesive to drive home the statement. The coins, however, were used as part of a promotional package by a Toronto advertising agency that obtained a special license from Canada’s Finance Ministry under the specific conditions that the design on the coins would not be altered.
Another business was not as fortunate. Postmedia News recently gained access to documents through Canada’s access to information legislation that indicates the unnamed individual requesting permission to melt 1-cent coins for industrial purposes had his request denied.
The July 2 The Vancouver Sun newspaper said the person is unnamed for reasons of privacy. His name is blacked out on documents obtained by the media. The person is described as being a “coin expert and entrepreneur in the industrial metals industry.”
An e-mail from this individual to the Finance Department obtained by Postmedia News reads, “The metals would thus be re-injected into the Canadian industrial sector, while helping the federal government in reducing the number of such coins in circulation.”
A December 2012 reply from Finance Minister Jim Flaherty to the individual reads, “As your proposal is not consistent with the Government of Canada’s objectives in phasing out the penny [1-cent coin], which include extracting the metal value of redeemed pennies, I unfortunately cannot approve your request.”
In other words, the Canadian government is attempting to hold a monopoly on scrapping its 1-cent coins.
Canada’s Conservative government ended production of the 1-cent coin denomination in May 2012 due to the rising cost of materials, labor and manufacturing costs. According to Canadian government information, it cost 1.6 cents to strike a 1-cent coin at that time. The government announced it expected to save taxpayers about $11 million Canadian (about $10 million US) annually through this decision.
Flaherty minted the final coin personally at a special ceremony at the Royal Canadian Mint facility in Winnipeg in May 2012.
The actual number of Canadian 1-cent coins still in circulation will likely never be known, but estimates place the figure in the billions. It is anticipated it will take years to remove most of them from circulation. The coin remains as legal tender, however as the coins are turned in to local banks the banks are required to return the coins to the Royal Canadian Mint. Once stockpiled at the RCM the government will be able to recover their scrap metal value by selling the coins to industrial buyers who will use the metal for other purposes.
According to the Canadian Federal Currency Act, Section 11, unless a special license has been issued it is illegal to “melt down, break up, or use otherwise than as currency any coin that is current and legal tender in Canada.” As long as the Canadian government retains the cent as legal tender the public cannot take advantage of the intrinsic value of the many hoards of cents remaining in private hands.
The logistics may become a problem. Canada’s 1-cent has been composed of either copper-plated steel or copper-plated zinc since 2000. Earlier cents have other metal compositions. Someone has to sort these before the coins can be scrapped. In the meantime the Finance Department will continue to hand out a cautious few permission slips to use the coins for special purposes.
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