Goodbye, Canadian penny. Hello, Botswanan pula?
The end of the penny has given the Royal Canadian Mint 20 per cent more capacity, and it plans to put it to use producing other countries’ coins.
The Mint struck its final penny last May after the federal government announced it would kill the coin as a cost-saving measure. Monday marks beginning of the penny’s phase-out as the Mint will stop distributing them to retailers and banks.
So it’s circulating a new growth strategy.
The Mint already has about 10-per-cent share in the global coin market “and our goal is to increase that to 15 per cent by 2020,” chief operating officer Beverley Lepine said in an interview from Berlin, where she is attending the 2013 World Money Fair.
The 105-year-old Mint has been making coins for other countries for more than three decades. In 2000, it introduced a new plated steel technology that it says makes coins cheaper to produce, harder to counterfeit and more durable. Since then, 30 countries including Botswana, Panama, New Zealand, Oman, Ethiopia, Barbados and Fiji have signed contracts to have multi-ply plated steel circulation coins made in Canada.
The Crown corporation – whose stated vision is to be the best mint in the world – is the world’s largest commercial mint as measured by revenue, profit and number of employees, Ms. Lepine said. It has about 1,100 employees. (Other countries, including the United States, have larger mints but they don’t have a commercial mandate.)
Foreign business accounts for about 12 per cent of the Mint’s total revenue, with most of its sales generated by its bullion business.
Competition is fierce, though. There are about 48 mints in the world, and about a dozen of those, such as the Dutch and Finnish mints, are also vying to win more global business.
The Canadian mint is expanding its Winnipeg coin-plating facility, a move that will boost capacity by 50 per cent as it bids to attract more overseas customers. And it is set to open a research-and-development centre, and offer training to staff from other mints on coin production and boosting productivity. It has already trained people from China and the Philippines and has interest from other countries “that can’t meet capacity demands and want their mint to be more productive,” Ms. Lepine said.
The federal government killed the penny in part because each one-cent coin cost 1.6 cents to make. But all the other Canadian circulation coins the Mint makes – from the nickel to the $2 coin – cost less than their face value to produce and distribute, said spokesman Alexandre Reeves.
High commodity prices are a key concern. “Record precious metal prices remain the biggest challenge for the business line,” the Mint said in its last annual report.
The Mint’s Winnipeg plant makes more than 1 billion coins for circulation a year, with the capacity to make 750 per second.
The end of the one-cent coin in Canada has prompted debate among other countries – including the U.S. and the U.K. – over whether they should follow suit.
Canadian pennies remain legal tender. And the excess capacity stemming from the penny’s demise could also go towards ramping up production of other Canadian denominations if needed, Mr. Reeves said.
Since 1908, the Mint has made 35 billion pennies which, it says, would circle the earth 16 times if placed side by side.