THE NICKEL BEHIND THE NICKEL
The Tale of Two Nickels, The Coin and The Metal
Nickel is a textbook example of a homonym. It can refer to our five-cent coin or the metal. And in U.S. coinage, the story of the two nickels—the coin and the metal —are interrelated. Nickel is the least familiar of the major circulating-coinage metals, past or present. While the histories and properties of gold, silver, and copper are widely known, that is not the case with nickel. Yet behind nickel’s relative obscurity is an unusual story—and some impressive coinage credentials.
Nickel was first used in coinage in antiquity, then not again for 2,000 years. Since it reemerged in the 1857 U.S.
Flying Eagle cent (patterns struck in 1856), nickel has lent its name to the five-cent coins of the U.S. and Canada, provided a different look for much of the world’s circulating coinage, and evolved from a laboratory curiosity to a major industrial commodity.
The nickels, dimes, quarters, and half dollars in our pockets and purses today contain between 8.3 and 25 percent nickel. To produce these coins, the U.S. Mint uses about 4,400 tonnes (metric tons) of nickel per year. A lustrous, silverywhite metal with a slight golden tinge, nickel is as dense as copper and has a substantially higher melting point. It is much harder and less workable than gold, silver, or copper. And nickel, along with iron and cobalt, are the only three elements that exhibit strong magnetic properties.
NICKEL’S AVAILABILITY
Nickel is the fifth most abundant element on Earth; most of it, however, is in metallic form and combined with iron in the Earth’s core. In the Earth’s crust, where nickel occurs mainly as oxide and sulfide minerals, it ranks 28th among the elements in abundance, about the
same as copper. Nickel is mined from two types of ores: surface deposits of laterite, a mix of iron and nickel oxides, and underground deposits of nickel-sulfide minerals.
Although metallic nickel is rare in the Earth’s crust, it is common in meteorites. Tools and weapons of exceptional quality were fashioned from meteoritic iron-nickel alloys as early as 3500 BCE. Around 1700 BCE, the Chinese began smelting nickel-rich copper ores to produce “white copper,” an alloy similar to today’s 75-25 copper-nickel (cupronickel) alloy. This use of nickel was unintentional, as early Chinese metallurgists believed that white copper was simply an unusual type of copper.
Nickel first appeared in coinage in the Greco-Bactrian kingdom, the easternmost part of the Hellenistic world, around 190 BCE. These cupronickel coins, comprised of a white-copper-like alloy that likely came through trade with China, were produced for only about 30 years. Nickel appeared again in the historical record when medieval miners in the Erzgebirge (Ore Mountains) along the present-day Germany-Czech Republic border encountered a reddish mineral that they assumed erroneously was a copper ore. These miners blamed their inability to extract copper on nickel, a goblin of German mythology, who had “cursed” the ore. They named the ore Kupfernickel, literally “copper goblin,” from the German word Kupfer for “copper.”
Scientists didn’t begin to unravel the mysteries of nickel until 1751. Swedish mineralogist Alex Fredrik Cronstedt smelted Kupfernickel to obtain a previously unknown white metal that he named “nickel” after the goblin of myth. Four years later, Swedish mineralogist Torbern Bergman produced pure nickel to confirm the metal’s elemental status. Initially, the rare Kupfernickel ore was the sole source of nickel. It is known today as the mineral nickeline (nickel arsenide). Not that it mattered then, because the metal was nothing more than a laboratory curiosity with no practical uses. In the 1820s, metallurgists found that nickel could enhance certain desirable qualities of steel. In 1830, Britain began using small nickel quantities to produce cupronickel trading coins. Residents of Britain’s Malaya protectorates used the coins. Norway built the first commercial nickel smelter in 1850.
NORWEIGAN SMELTER DRAWS U.S. INTEREST
Among the individuals interested in the limited Norwegian production of nickel was James Ross Snowden, the director of the United States Mint. In the early 1850s, Snowden was facing problems with the U.S. large cent. Struck in various designs since 1793, the cumbersome 10.9-gram, 28-mm-diameter large cent, made of copper, had grown increasingly unpopular. Even more concerning, the high price of copper was making the cost of producing the large cent prohibitive. To solve these problems, the Mint designed the Flying Eagle cent, a much smaller, 4.7-gram, 19-mm-diameter coin consisting of an innovative 88-12 copper-nickel alloy. In 1857, the first official issue of the Flying Eagle cent—17.4 million coins, the most massive annual production of any U.S. coin to date—used 9.8 tonnes of Norwegian nickel. The Indian Head cent composed of the same 88-12 cupronickel alloy replaced the Flying Eagle cent in
1859. Both coins became known as “nicks” because of their nickel content and as “white cents” for their lighter color than that of the large old cent. To accommodate a new three-cent postal rate back in 1851, the Mint had introduced a three-cent coin with a 75-25 silver-copper composition. In 1865, to counter silver hoarding at the end of the Civil War, it replaced its silver-copper alloy with one of
75-25 cupronickel. This new coin was popularly referred to as the “three-cent nickel.” Also, in 1865, the Mint replaced the nickel in the Indian Head cent with copper, containing small amounts of tin and zinc. The following year, the Mint introduced the 5.0-gram, 75-25 cupronickel Shield five-cent coin, which became known as the “five-cent nickel.”
Just as the Mint stepped up its use of the cupronickel alloy, a domestic source of nickel suddenly appeared—the American Nickel Company of Camden, New Jersey, owned by Philadelphia industrialist Joseph Wharton. Wharton, who had profited handsomely from zinc mining and smelting in the 1850s, saw an opportunity in the U.S. Mint’s growing use of nickel. He began vigorously promoting cupronickel coinage through his political contacts in Washington, D.C. while cautioning against excessive purchases of foreign nickel.
Not coincidentally, Wharton had acquired the Gap Mine near Lancaster, Pennsylvania, in 1863. The Gap Mine had been worked for copper intermittently and with little success since 1718. In 1852, the Gap miners discovered nickel ore minerals millerite (nickel sulfide) and pyrrhotite (nickel-rich iron sulfide). But the subse-
quent effort to mine nickel had also failed, and the mine closed in 1860. Wharton bought the inactive mine at a bargain price, reorganized it as an efficient nickel-mining operation, and established a nickel refinery in Camden,
New Jersey. And when the Mint began high-volume production of the cupronickel three-cent and five-cent coins, Wharton owned the only domestic nickel source.
In just three years, the Mint turned out 75 million Shield five-cent nickels that contained nearly 100 tonnes of nickel, then a substantial part of the world’s nickel supply. With all of it coming from Joseph Wharton’s enterprise. By the time the Gap Mine closed in 1893, it had yielded 2,250 tonnes of nickel. Much of the yield had gone into a quarterbillion Shield and Liberty Head nickels. Wharton used part of his hefty nickel profits to establish the University of Pennsylvania’s Wharton School of Business and help found the International Nickel Corporation (now Vale Limited).
THREE-CENT NICKEL PHASE OUT OPENS DOORS
When the three-cent nickel, unpopular because it didn’t fit with the decimal system, was discontinued in 1889, the name “nickel” was used exclusively for the five-cent coin and has been since. Meanwhile, a few other nations were adopting nickel coinage. In 1881, Switzerland issued a 20-centime coin made of pure nickel, while several other European countries began issuing pure-nickel or cupronickel coinage. Through the 1880s, coinage made up a significant part of nickel’s still-limited demand. In industrial use, however, the material was still only a minor alloying metal. But alloying technology was rapidly advancing, and metallurgists already knew of the excellent corrosion-resistance of chromium-steel alloys, in which surface chromium reacted with atmospheric oxygen to form a thin layer of inert chromium oxide to protect the underlying steel. But while chromium-steel had great industrial potential, it was brittle and difficult to work.
In 1889 metallurgists found that adding nickel to chromium steel increased corrosion-resistance. Also, it was discovered that it significantly improved malleability, durability, and overall strength. Chromium-nickel steel, now called “stainless steel,” revolutionized the steel-making industry and made nickel a bona fide industrial metal with rapidly increasing value and demand. By 1890, New Caledonia, a French dependency in the southwestern Pacific, had displaced Norway as the leading source of nickel. A decade later, Canada took the lead after developing massive nickel deposits in Ontario’s Sudbury Basin.
During World War I, nickel-steel alloys became critical for the manufacture of gun barrels and armor plates. Canada stepped up production to 46,000 tonnes of nickel per year, while Germany, without any nickel resources, resorted to daring military operations to obtain small supplies. Nickel discoveries in the 1920s included the great deposits at Norilsk-Talhakh in the Soviet Union and the Merensky Reef in South Africa. Meanwhile, nickel-steel alloys continued to find new uses, notably in the cylinder heads and pistons of high-performance, internal-combustion engines, where few other alloys could endure the prolonged high-temperature stresses. During World War II, when nickel demand far exceeded supply, the United States War Production Board declared the metal a strategic material and restricted nonmilitary uses, including the Jefferson nickel production.
In October 1942, the Mint replaced the 75-25 cupronickel alloy in the Jefferson nickel with a 56-35-9 copper-silver-manganese alloy. The reverse of these “wartime nickels” carried a prominent “P” mintmark over Monticello’s image, the first use ever of the Philadelphia mint mark that was intended to aid in the planned postwar sorting and withdrawal of the coins. Production of wartime nickels conserved 1,100 tonnes of nickel, a relatively minor contribution to the war effort. Nevertheless, wartime nickels served as a highly publicized example of the sacrifices necessary for victory. The Jefferson nickel returned to its regular cupronickel composition in 1946.
Canadian nickels, minted from 1922 to 1942 and from 1946 to 1952, consisted of pure nickel. In 1951, a unique design commemorated the 200th anniversary of Alex Fredrik Cronstedt’s scientific discovery of nickel. The reverse depicted the towering smokestack of a Sudbury nickel smelter with the word “NICKEL” in bold letters and the dates “1751-1951.” This design would be reproduced in stainless steel in 1964 as a 30-foot-high monument that still stands in Sudbury today.
COINAGE ACT OF 1965 TAKES SHAPE
In the early 1960s, the intrinsic value of circulating U.S. silver coinage began to exceed its face value. To counter rampant hoarding, Congress passed the Coinage Act of 1965 that authorized the immediate withdrawal of silver from dimes
and quarters, and a belated withdrawal from half-dollars. These were replaced by “clad” coins consisting of a copper core “sandwiched” between layers of 75-25 cupronickel and with an overall 91.7-8.3 copper-nickel composition. Ahead of the Coinage Act of 1965, about 500 tonnes of nickel went into the production of the Jefferson nickel each year. But by the early 1970s, the Mint’s use of nickel in nickels, dimes, quarters, and half-dollars had soared to 2,500 tonnes.
Another boost in nickel usage came with the 1998-2008 “50 State Quarters Program,” during which the Mint turned out 36 billion commemorative quarters. In 2006 alone, the Mint used 1,380 tonnes of nickel in 2.9 million quarters of five commemorative designs. Industrial demand for the metal had surged during the 1990s, thanks to the rapid development of China’s economy and its need for vast tonnages of stainlesssteel and nickel-steel alloys. Nickel mines around the world ramped up to keep pace with the growing demand. But by 2000, the market oversupply had depressed the nickel price to only $3 per pound.
Mines then cut production—while nickel demand continued to grow. By the end of 2006, when nickel stocks had dropped below critical levels, panic buying drove the price of the metal to $23.60 per pound, pushing the melt value of the Jefferson nickel well above its face value. To prevent hoarding, the Mint issued a 2007 ruling that criminalized the exportation or melting of U.S. nickels and cents. Rising zinc prices had also created a similar problem with the cent. But mine production quickly caught up with demand, and nickel prices dropped to their previous levels.
With nickel now selling for $6.50 per pound and copper for $2.78 per pound, the Jefferson nickel’s melt value is just over four cents. Today, coinage comprises only a tiny fraction of global nickel demand. Stainless-steel, nickel-steel, and specialty alloys account for 86 percent of demand and electroplating and battery applications for another ten percent. The use of nickel in batteries is rapidly increasing. Nickel is essential to the lithium-ion batteries that power electric vehicles; the batteries in a single electric vehicle can contain as many as 90 pounds of nickel.
According to the United States Geological Survey, 25 nations now collectively mine 2.7 million tonnes of nickel each year. Australia, Indonesia, Russia, South Africa, and Canada account for half the global production. The United States, as of July 2020, has only one primary nickel mine that produces 14,000 tonnes of nickel annually, along with lesser amounts of by-product copper. Although the U.S. obtains additional nickel through recycling and as a by-product of base-metal and platinum mining, it depends on foreign sources for most of its nickel supply. The Nickel Institute, a global association of nickel producers, estimates that 80 percent of all the nickel mined throughout history has been mined in just the last 30 years. Despite today’s nickel-mining boom, experts do not foresee a shortage of the metal. Global ore reserves now contain
300 million tonnes of nickel, and most of it is shallow laterite ores. At the current rate of mining, these reserves will last more than 100 years. And new nickel deposits continue to be discovered and developed.
The U.S. Mint now uses 4,400 tonnes of nickel each year in its circulating coinage, more than any other nation. Nickel also appears in foreign coinage such as the one Euro, Britain’s two-pound, India’s 10-rupee, Hong Kong’s 10-dollar, South Africa’s five-rand, and Chile’s 500-peso coins, all containing between 8 and 17 percent nickel. Switzerland’s circulating coinage consists almost entirely of 75-25 cupronickel. Canada’s Voyageur “silver” dollar, minted from 1968-1987, consists of pure nickel, and the one-dollar “loonie,” created between 1987 and 2011, contains 91.5 percent nickel. Over the past 180 years, nickel’s stature as a coinage metal has grown immeasurably. Production of the
1857 U.S. Flying Eagle cent—the first use of nickel in modern circulating coinage—required 9.8 tonnes of nickel. Today, an estimated 20,000 tonnes are used each year to produce the world’s circulating coinage.
When it comes to coinage, the price will determine the future of nickel. Considering the metal’s growing industrial demand and projected higher prices, many analysts suggest that nickel will price itself out of circulating coinage in as little as a decade and possibly be replaced by nickel-plated steel coins. Although nickel will never achieve the legendary coinage-metal status or familiarity of gold, silver, or copper, it nevertheless has quite a story of its own—as the nickel behind the nickel.