The South African Mint is certainly coining it, reports Belinda Beresford
Lost down the back of sofas, stored in glass jars, hiding at the bottom of pockets or simply discarded, South Africans are very careless with their coins and about one billion new coins are needed each year to replace those removed from circulation.
This may be bad news for the government, which has to pay the replacement costs, but it is good news for the South African Mint, the country’s sole coin manufacturer.
In future, the real profits could come from overseas as countries as far away as Estonia and New Zealand begin to use coins made
in South Africa. Up to 30% of the mint’s profits come from international sales and this proportion is growing. The mint’s managing director, Ed Harbuz, thinks foreign markets may eventually make the larger contribution to revenues.
Harbuz is coy about profits, which are in the order of tens of millions of rands, saying simply the business is “quite profitable”. He is also discreet about potential new export markets, saying only that new contracts are expected which will push the mint’s output this year to around two billion coins, almost full capacity.
Another growing source of income is numismatic (or collectors’) coins and medals. Gold, silver and platinum numismatic coins are a multi-billion-dollar business world-wide. Europe and North America are the two major markets for this business, which, Harbuz says, all the big mints take very seriously.
But the South African Mint has its own advantages. It produces the world-famous gold krugerrands and among its special medals is one bearing the image of Nelson Mandela. This is the only product licensed to carry the president’s image in metal, and most of the profits from the sale of these medals are given to Education Africa.
The mint has also diversified to gambling tokens for overseas casinos and jewellery.
Harbuz says the mint is also looking at developing new products which will counter the increasing competition from electronic payment systems, although he does not expect coins to ever disappear entirely. In the meantime business is good.
There are about 50 mints around the world competing for the business of about 200 countries, Harbuz says. The United States’s mint is the world’s biggest, but it only produces for its domestic market.
South Africa’s coins are now electroplated on a steel core. This is a much cheaper option than the old alloy coins and also prevents the situation where devaluation makes the metal content of coins worth more than the face value.
Electroplating also allows for the precise allocation of different electromagnetic properties to different kinds of coins to help prevent counterfeiting and substitution in vending machines.
The South African Mint, wholly owned by the Reserve Bank, boasts that it is the most modern in the world. Harbuz is confident about the mint’s security, which he considers “very tight and very expensive”. The mint can’t control every last coin, but there have not been any major losses he says.