US copper penny material transition

1970s copper price spike; pennies switched to zinc with copper plating to prevent melt-down arbitrage.

In the late 1970s, copper was starting to go through the roof. New York City didn't know what to do. They could not put more wires underground to carry telephone conversations or anything else. Copper just took up too much space. Because Corning finally perfected the optical fiber, now you could have ten million telephone calls on one wire. They were talking about the problem in the 1970s that copper pennies were going to be worth more than one cent, and people were going to start melting down all the pennies and selling it as a copper product. That's one of the reasons — what are our pennies made out of now? Zinc with a copper plating. It's not a thin copper plate, it's a fairly thick copper plate. Now inflation's come along and we're running into the problem that zinc is getting too expensive, and now they're saying do we really need pennies, we'll just go to nickel exchange.

Early-1980s switch from copper to zinc-with-copper-plating, driven by copper-price threshold at which melting pennies becomes profitable. Now repeating with zinc.

Back when I was your age, pennies were made out of copper. At that time copper cost 60 cents a pound. Whenever the price of copper got to $2 a pound it was going to be cheaper to melt your pennies and sell it for the copper than the value of a penny. The government was looking at — inflation is going to kill the copper penny. In the early '80s they came up with the zinc penny, which is the penny you know today. They're actually zinc with a copper plate on the top. Now that zinc price is going from 40 cents a pound up to whatever it is today, 80 cents or a dollar a pound, the extra processing means it's getting to the point where it's going to be cheap enough to melt your pennies to get the zinc out. It currently costs 1.6 cents to make a penny. The pennies cost the Treasury more than a penny to make. What they're really worried about is not the fabrication cost, because pennies last a long time in service. They're worried about the fact that when this is the cheapest source of zinc or copper, people are just going to melt them down. At that point they can't afford to make enough pennies to replace the ones that people melt illegally. But nonetheless they'll do it.