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OTTAWA (Scrap Monster): Canada will use brass plated steel in its one dollar and two dollar coins replacing nickel cores on highly volatile nickel prices.

The high prices of nickel has pushed up the production cost of the coins and has also lead to hoarding activities that reduces the efficiency of the monetary system.

In many countries, the intrinsic metal value of the coins are greater than their face value, Canada’s Official Gazette explained.

The new coins will be slightly lighter, CAD 16 million cheaper to produce and ship and harder to counterfeit. However, the change will cost coin operated industries up to CAD 40 million to recalibrate vending machines to recognize the new coinage.

The mining sector will also be hit as global nickel demand falls by about 539 tonnes per year or 0.05%.

The Royal Canadian Mint has produced more than one billion loonies, as the one dollar coins are called, and over 700 billion tonnes, the two dollar coins, since they were introduced in 1987 and 1996, respectively.

In the Canada Gazette, it cited fluctuations in the price of nickel by more than 1,000% on the London Metal Exchange over the last decade for the switch to steel.

LME Nickel is currently trading in at four times higher than it was in 2000.