This is a very difficult question to answer as the Royal Mint does not publish the individual cost of each coin. Even a Freedom of Information request will get the same response, as the Royal Mint is among the exemptions. However, as we will show below, the raw materials that make up a single £1 coin cost less than 4p at the time of writing.
This is a question that is often asked of the Royal Mint, who are the sole producers of legal tender coinage for the UK. However, their official answer may surprise you. On their website, the Royal Mint gives this answer:
“The cost of producing United Kingdom coins varies according to the specification of each denomination. The value of metal in each coin accounts for a large part of the total cost, but it is also necessary to take into consideration the broader costs of the manufacturing process. These vary according to the complexity of the coin.
The Royal Mint does not reveal exactly how much it costs to make specific coins as such information could be used to its competitors’ advantage.”
It is interesting to note the part about competitors. Currently, the Royal Mint is the only permitted manufacturer of coins for the UK.
However, you may not be aware that it does not just make coins for home use (for the record, it does not make notes as these are produced by the Bank of England) but is a Limited Company that also exports to other countries.
Indeed, the Royal Mint exports its products to around 60 countries each year – major customers include New Zealand and a number of other Commonwealth countries, as well as some African states – and is also a supplier of medals and other commemorative items struck for countries across the world. With this in mind, we can see why it likes to keep its production costs private!
Before we move on, an interesting set of figures: in 2015, the Royal Mint produced 2.007 Billion coins for the UK alone. For international customers, it produced a further 2.4 Billion coins. That’s some food for thought!
So, can we work out what it might cost to produce a pound coin? We can go some way towards getting an idea, so let’s have a look!
Can We Work Out the Cost of a £1 Coin?
We are hampered here as we don’t know the cost of the manufacturing process, the labour costs involved, and the cost of the machinery involved. To get a true figure would involve knowing all of these plus other factors that need to be accounted for – including the transport costs, depreciation of assets and so on – but what we do know is what a £1 coin is made from, and how much of each metal involved is in each coin.
The problem is that the price of metals is not standard, and fluctuates all the time. This is the reason the Royal Mint switched the make-up of some coins from bronze to copper plated nickel as the cost of copper rocketed not that long ago. We can, however, look at the cost of these metals at the time of writing, but first we need to know what the £1 coin consists of.
What is a £1 Coin Made From?
The current £1 coin is an amalgam of three base metals – copper, zinc and nickel. It is known, thanks to the Treasury, that a coin is made up of the following: 70% copper, 24.5% zinc and 4.5% nickel. We also know that a single £1 coin weighs 9.5grams.
At the time of writing, March 1st 2020, the price of each of these metals stood as follows:
- Copper – $5,572 per tonne
- Zinc – $2,018 per tonne
- Nickel – $12,186 per tonne
Base metal prices are always provided in US Dollars, so we have to apply a conversion rate. After all, maths is always fun!
At this very moment, the US dollar is worth £0.78 pound sterling. Let’s apply that to our metal prices, and find a £ per kilo price for each element.
- Copper – £4.35 per kilo
- Zinc – £1.57 per kilo
- Nickel – £9.50 per kilo
Now we’re getting close to some figures we can work with easily! Get your calculator out and have a go at this last bit with me!
So, what we’re looking for now is the proportion – in grams – of each metal, and from there we can determine the cost of materials. This proportion works put as: 6.65g copper, 2.33g zinc and 0.42g of nickel. So, what is the value of the metal in a £1 coin at today’s prices and exchange rate?
- Copper – £0.03
- Zinc – £0.003
- Nickel – £0.004
That gives us an approximate raw materials cost per £1 coin of almost 4 pence.
We have to come back, however, to the fact that we have no idea of the Royal Mint’s other costs involved in manufacturing £1 coins and – indeed – other coinage, but we can be somewhat confident that a £1 coins does not cost more than £1 to make.
So, to conclude, this is one question that we cannot answer for sure, but we hope you’ve enjoyed the maths lesson, and meanwhile keep collecting coins, as you learn a lot more than you might think!