Inconsistencies within the U.S. Mint’s mutilated coin redemption program have threatened to cost recyclers millions of dollars in redeemable coins.
The Institute of Scrap Recycling Industries (ISRI) submitted comments to the U.S. Department of the Treasury in response to the U.S. Mint’s notice and request for comments regarding proposed revisions related to the exchange of uncurrent, bent, partial, fused and mixed coins, updates to the redemption rates and procedures, and acceptance and processing of bent and partial U.S. coins.
In its comments, ISRI details the burden placed on recyclers when the program was unexpectedly suspended for a second time, after being reinstated in 2019. ISRI also references the historical significance of recyclers recovering coins, which has become an integral part of many recycling companies’ operations, product mix, and bottom lines. Additionally, ISRI’s comments highlight the potential dangers of the Mint’s proposal to prohibit the redemption of coins retrieved through the shredding process, as it may drive some recyclers to return to less effective manual sorting and separation processes that unnecessarily increase the risks to workers.
Excerpts from ISRI’s comments follow:
The recycling process and mutilated coins
This practice began when recyclers would find loose coins that had fallen to the ground during the recycling process of cars, vending machines and other products. The business evolved with advances in sorting technology and the advent of new machinery capable of identifying very small items.
Shredding is the predominant method for recycling heavy steel‐bearing end of life products into commodity grade products, including automobiles, appliances, coin operated laundry machines, and vending machines. Shredding greatly improved recycling productivity with great benefits for environmental protection, natural resource conservation, manufacturing sustainability and reliability as well as worker safety.
Climate and responsible sourcing of precious metals
In addition to protecting the integrity of the nation’s coinage, the environmental benefits of redeeming and recycling old and mutilated coins fits well within the environmental and climate goals of the Biden Administration. Melting mutilated coins into new coins saves energy and reduces the environmental impacts compared to virgin materials.
Prohibiting foreign sources of coins is inconsistent with protecting the nation’s coinage
Beginning roughly around 2003, the vast majority of Zorba generated in the U.S. began to move to China due to the high demand for aluminum within that country. In addition, the extraordinarily low cost of labor in China allowed Chinese companies to hand separate the various metals contained in Zorba at a rate lower than the cost of mechanical sorting in the U.S.
The Mint first expressed concerns about the possibility of fraud within the Mutilated Coin Redemption Program in May 2008 and subsequently reported these concerns to the Treasury Department’s Office of Inspector General (OIG) based upon the value and frequency of mutilated coin redemptions by a relatively small number of individuals and corporations. The OIG’s report found “several weaknesses, that if addressed, would likely improve the integrity of the Mutilated Coin Program.”
ISRI has long supported and continues to advocate these and other recommendations to strengthen the Mint’s mutilated coin redemption program to dissuade and prosecute counterfeiters and other violators.
The Suspension has been a major financial burden on recyclers
When the mutilated coin redemption program was resumed over three years ago, scrap recyclers had many years’ worth of accumulated mutilated coins as a result of the earlier 2015 suspension.
Without any indication that recyclers would not be eligible to redeem coins through this program, recyclers continue to collect coins from their shredding and downstream sorting and separation operations and now have over six years’ worth of mutilated coins stored at their facilities. The storage of these coins is not the only burden scrap processors encounter as certain recyclables such as Zorba is priced to reflect the redemption value from mutilated coins. Accordingly, recyclers have lost significant revenues as a result of the program’s suspension.
Prohibiting recyclers from redeeming coins is unwarranted
Recyclers have been participating in the Mint’s Mutilated Coin Redemption Program since its inception in 1911.
ISRI has long suggested a qualified redemption program or ‘trusted redeemer” combined with a robust certification program that requires recyclers to certify that their submissions are in full accordance with all the Mint’s rules and guidelines and recommending that any program participant that violates the rules or guidance be suspended from the program.
The mutilated coin redemption program should be available to everyone
The Mint could accept these coins with several preventive measures to ensure compliance such as the following certification and inspection protocols.
1. A ‘Qualified’ Redemption Program
2. Site Inspections
Published in the August 2021 Edition