Foreign Coin Production Ends at the Royal Mint – The End of an Era or Another Step Closer to a Cashless Economy?

If it hasn’t become obvious to many that the decreased use of physical currency has reached – if I can put it this way, epidemic proportions, then the announcement last week from the Royal Mint will surely bring the issue to the forefront of coin conversation. Gone are the days when mints were literally places to just produce national coinage, many of them have evolved into other lines of business and the Royal Mint it seems has taken the lead into transitioning itself from just mere coin production. To get a better perspective on the importance that the Royal Mint will no longer mint coinage for overseas clients after December of this year, let’s delve into the long history of this additional source of revenue which for all intents and purposes began nearly 700 years ago.

An Un-Paralleled Background

Founded in the year 886 and almost without interruption, the Royal Mint has produced coinage of the realm for England and Great Britain with the first coins meant for overseas use having been minted in the year 1325. In this case, the coins were struck during the reign of King Edward II and were shipped to Bordeaux for use in His Majesty’s territories in south-west France.

Fast-forward a few centuries and to satisfy the coinage needs for an ever-growing empire, the Royal Mint had commissioned branch mints in locations such as Melbourne, Perth and Sydney in Australia, Pretoria in South Africa, Bombay – present-day Mumbai in India and Ottawa in Canada. Many of these plants evolved into separate minting facilities and are still in use today. For many years The Royal Mint had been the world’s leading export mint, particularly in countries who gained independence from Great Britain, where there were no minting facilities or when a country’s own national mint could not meet production demand. Some of these contracts with countries which were former colonies are now over half a century old and have continued since their independence.

At the height of the Royal Mint’s foreign coin production, they were supplying coins and/or blanks to nearly 80 countries. With emerging technology of electronic payment methods during the last two decades and over time the decrease of physical currency in favour of the ever-present debit card and more recently a smart-phone has become rampant and swift. As a result, the Royal Mint’s impressive list or, lion’s share of client countries has shrunk to include just a handful in Africa, the Caribbean, Asia and remaining British Overseas territories. Although the Royal Mint does not publish a list of their client countries owing to confidentiality, it has been estimated that this market has now been reduced to about 22 countries from the last figures published in the Royal Mint’s annual report of 2022-23. From this same report, overseas deliveries of both minted coins and blanks amounted to 1.34 billion pieces reaching 28 countries. The figures from 2021–22 indicated 1.55 billion pieces having been shipped to 22 countries which indicates a decrease of about 210 million pieces or a 16 percent loss year-on-year. The same report indicated sales in overall currency coin production increased to £74.4 million, up by a little more than £10.3 million from fiscal year 2021–22. However, this department’s operating loss of £13.1 million was also recorded, a considerable increase from previous figures of a £4.5 million loss – not very encouraging figures.

Expansion and New Ventures

However, it is important to give credit its due by taking these figures into proper context and mentioning the Royal Mint is indeed a profitable business. The annual report outlined during the same timeframe operating profits stood at £17.7 million for year ending 31st March 2023 so, not too bad in the scheme of things. As expected and for the third consecutive year, revenue was entirely driven by the Royal Mint’s consumer division – essentially from the sale of precious metals investments, collectables, and historic coins. It was the Currency division which continued to see a predictable decline in profitability in line with decreased cash use globally.

In place of foreign coin production, the Royal Mint have positioned themselves to embark on other ventures such as precious metal reclamation by investing £9 million in a dedicated plant at their location in Llantrisant, Wales for recovering gold from discarded electronic devices. Fully operational since last year, the Royal Mint have boasted the facility is the first in the world to bring pioneering green technology that will extract precious metals from items such as mobile phones and laptops on an industrial scale.

Last year, and to test the numismatic market the Royal Mint marketed a silver commemorative coin labelled the first of its kind. Produced from a blend of silver recovered from medical and industrial X-ray films, the half-ounce silver proof was produced in celebration of King Charles III’s 75th birthday. The project was apparently given the green light by the King himself, a long-term advocate for ecological sustainability.

Gold reclaimed from electronic items is slated for the yet another of the Royal Mint’s latest business ventures not pertaining to the production of coinage. A jewellery range known as 886 – so named after the year of the Royal Mint’s founding was introduced by the Royal Mint’s CEO Anne Jessop in April of 2022. In their recent announcement which outlined the Royal Mint will no longer accept consignments for foreign coin production effective from December of this year, it was explained that employees who were assigned to these accounts will have the option to transfer into alternate roles in other departments or within the reclamation site.

A Market With Fewer Coin Producers

The report’s figures offer a pessimistic future with regard to coin production, both home and abroad so it is perhaps no wonder that the Royal Mint has taken the decision it has regarding further currency coin production. This news coupled with the fact that the privately-owned Pobjoy Mint in the UK closed its doors permanently last November means the market to produce worldwide circulation coinage has just gotten much slimmer. It’ll be interesting to see whether other mints who posed considerable competition to the Royal Mint such as the Mint of Finland, the Royal Dutch Mint and in North America, the Royal Canadian Mint and US Mint will pick up from where the Royal Mint left off. Alternatively, other world mints may simply decide to follow the example of the Royal Mint by abandoning what might be perceived as a sinking ship altogether. This trend would likely lead to smaller countries having to introduce further methods of electronic payment which lessens the reliance on physical currency – a kind of vicious circle and which ultimately led the Royal Mint deciding to cease foreign coin production in the first place.

The Royal Mint’s colourful, eye-catching business brochure published in 2017 and distributed to those in the decision-making position highlighted a successful and long history of coin production for client countries. From the supply of approximately 5 billion coins and blanks to over 40 countries each year to innovative production technology including their mono-ply plating process, the Royal Mint’s promise was to deliver the world’s best coin currency to their partners around the globe.

As far as production for the United Kingdom’s circulation coinage is concerned, the Royal Mint who work closely with, and are wholly owned by the Treasury have indicated they remain fully committed to making UK coins, which, after all has been at the heart of The Royal Mint for 1,100 years. Their commitment is against a backdrop of an announcement made in September 2020 by HM Treasury that owing to a substantial supply and diminished use of 1 penny, 2 pence and 2 pound circulation-type coins, these denominations would not be minted for at least another decade. According to the statistics of the UK’s National Audit Office, records show that just ten years ago, cash was used in six out of 10 transactions. The trend to use electronic payment methods indicated that by 2019, cash was used in under three of 10. Having referenced an epidemic of cashless transactions earlier, this phenomenon was exacerbated by the COVID crisis in 2020-21 which saw the pandemic having what may be a permanent effect in favour of contactless transactions across the world. Unfortunately for mints, coins have been regarded as more of a casualty in cashless economies than banknotes for some time as households would rather stash away banknotes to use in the event card and smart phone payment systems crash.

Going Forward – A New Rationale

Going forward, the Royal Mint has explained their history and expertise in coin making has enabled them to embark into areas such as precious metals investment, bullion coin and ingot production as well as luxury jewellery. It should also be pointed out that the Royal Mint’s recent announcement does not specify whether commemorative and/or collector coins are included. These types of coins are usually more profitable to produce as their mintages are far smaller and marketed to collectors with ample premiums attached.

It’s difficult to argue against the rationale, stopping the production of a product that is neither used or needed by the public as it once was seems a logical decision from a company that is after all run like any other for-profit entity. But, it can be argued that coins, banknotes and the like are integral assets and symbols of nationhood. On the other hand, a cashless electronic transaction is somewhat stateless and can be completed anywhere in the world using any currency.

Production concerns aside, it adds yet another nail in the coffin for any libertarian’s ability to spend one’s own money anonymously and without a paper trail. Consequently, the production of bullion-related coinage may definitely take up from where physical currency left off as many revert to its use as a solid means of payment. The Royal Mint’s announcement is that of a dynamic business simply changing course in order to remain vital, relevant and able to compete under these new circumstances. With all of these ever-changing money trends, can anyone really blame them?

The author, Michael Alexander, is president of the London Banknote and Monetary Reseach Centre.