It now costs about 1.3 cents to produce a penny and 7.7 cents to make a nickel, or five-cent coin, according to US Mint officials.

This is a phenomenon known as ‘negative seignorage’ and results in a loss to the US Treasury of about 100 million dollars annually, according to lawmakers.

The House of Representatives passed legislation earlier this month that would bring back steel cents for the first time since World War II. These copper-coated steel cents would circulate alongside the current pennies, which have been made primarily from zinc with a copper finish since the 1980s.

The five-cent coin, currently made from copper and zinc with a nickel finish, would also be made mostly from steel while retaining the nickel coating, under the bill.

‘The penny and the nickel have been in a negative seignorage situation since 2006,’ said Representative Luis Gutierrez, a backer of the legislation that passed the House.

‘Prior to 2006, the government had never before spent more money to mint and issue a coin than the coin's legal tender value. The US Mint anticipates that by changing the compositions of just the penny and the nickel to less expensive materials, we can save the government hundreds of millions of dollars without compromising the integrity or the utility of these coins.’

However, the US administration sees some problems with the bill approved in the House.

Mint director Edmund Moy said some aspects of the bill are ‘too prescriptive’ and might not end up saving money for taxpayers. He said a requirement that changes be made in 270 days from passage of the bill is ‘an unrealistic timeframe’ that might force the Mint to pay too much for metals.

Further, he argues that the bill ‘unnecessarily limits US coin composition to metals’ when new technology might allow for use of other materials that can be substituted at a lower cost.

Since the issue has been debated in the past few years, some have argued the US should simply eliminate the penny and save even more cash.

‘The use of electronic money ... becomes more popular every year, making those jangling coins even less useful or necessary,’  the Chicago Tribune said in an editorial.

‘Why not let this surge in commodity prices be the catalyst to make cheaper coins -- and get rid of the penny? Its ingredients are expensive and its usefulness has all but disappeared.’

But Mark Weller, executive director of Americans for Common Cents -- a group focused on saving the lowly penny -- said it would be a mistake to eliminate the coin with the smallest denomination.

‘We do think it's appropriate to make our coins less expensively,’ he said. ‘We don't want any debate of the content of the coin turn into a discussion about eliminating the coin.’

Weller said it would be best to pass a law to give the Mint flexibility to find the cheapest content, noting that zinc prices have fallen by half from record levels while steel is up 40 percent in the past six months.

An elimination of the penny, according to Weller, would hurt those who could least afford it.

He cited research showed ‘a minimum of 600 million dollars’ of costs in rounding up to the highest nickel. ‘This would hit people who use cash transactions,’ who are generally among the least affluent, he said.

Weller said polls in the past 15 years show two-thirds to three-fourths of Americans want to keep the penny.

Finally, he said the penny is an important tool for charitable fund raising by school children and other groups, in some case raising millions of dollars.

‘Pennies may seem small for an individual transaction but when you multiply them, the pennies really do add up,’ he said.