Metal in Australian Coins Worth More than Face Value

Australia’s lower denomination coins will end up costing more to make than their face value, according to a report by the research outfit Morningstar, thanks to soaring metal prices.

Prices of the two key metals in Australia’s silver coins – nickel and copper – have skyrocketed this year due to Russia’s invasion of Ukraine, with the price of nickel spiking 250% on the London Metals Exchange last month to more than $100,000 a tonne. Copper is predicted to see a similar spike.

According to Morningstar, the metal in Australia’s 5 cent coins is now worth 6 cents, up from 4 cents six months ago. Over the same period, the value of metal in a 10 cent piece has increased from 9 cents to 14 cents, while metal making up a 20 cent piece has jumped in value from 18 cents to 28 cents.

However, the 50 cent and higher denominations continue to have a higher face value than their metal content. There is 38 cents worth of metal in the dodecagonal coin today, against 25 cents six months ago, while the metal value of each of the $1 and $2 coin remains below 10 cents.

The higher metal prices will eat into the Royal Australian Mint’s profit from making coins – ie. seigniorage.

Seigniorage returned to the government in 2020-21 was A$45.3 million, well above the Mint’s target of A$19.9 million – a result it said in its annual report was due to government financial support during the pandemic ‘which saw an increase in the availability of cash within the economy and a corresponding demand for coin’.

The impact of rising metal prices will not be immediate because the Mint has a stockpile of metal. It has, nevertheless, raised questions again on the future of the 5 and 10 cent coins, demand for which has dropped by over 50% in the past two years.