Financial situation Royal Dutch Mint

[eurocoin]

Disclaimer: This topic is meant for informational purposes only. The information can be incorrect or outdated. All information mentioned in this topic is publicly available.

Hmmm, so in spite of selling numerous highly surcharged coins, they are bankrupt? WoW!

I just wonder how much does a mint worker (depending on the position he holds) earn every month? (Not only Dutch mint but all mints in EU in general)

Aditya

The problem is a deal with Chile that they made in 2013. They had to mint 850 million Chilean 100 pesos coins. There were problems with the order, a brand new packaging machine didn't work (RDM sued the producer). Also they didn't have the equipment to count so many coins so the coins had to be counted by hand. Furthermore they used low quality metal, the Chilean authorities rejected the coins (oxidation spots)  and the RDM had to pay a fine because of breach of contract. On inside footage secretly filmed by an employee, I have seen the particular coins but was unable to spot any quality problems (oxidation spots). The particular employee published the video on his Facebook page.

In 2014 the Royal Dutch Mint was unable to refund the government the face value of the minted coins for circulation. The Dutch Ministry of Finance is the only shareholder of Royal Dutch Mint and is currently considering what to do with the mint. One of the possible scenarios is closure.

After what they have done to the Geldmuseum I think it's plain karma. On the other hand it would be very bad if the Netherlands would no longer have its own mint after almost 450 years.

[Bimat]

The problem is a deal with Chili that they made in 2013. They had to mint 850 million chillean 100 pesos coins. There were problems with the order, a brand new packaging machine didn't work (RDM sued the producer). Also they didn't have the equipment to count so many coins so the coins had to be counted by hand. Furthermore they used low quality metal, the Chilean authorities rejected the coins (oxidation spots)  and the RDM had to pay a fine because of breach of contract. On inside footage secretly filmed by an employee, I have seen the particular coins but was unable to spot any quality problems (oxidation spots). The particular employee published the video on his Facebook page.

In 2014 the Royal Dutch Mint was unable to refund the government the face value of the mnted coins for circulation. The Dutch Ministry of Finance is the only shareholder of Royal Dutch Mint and is currently considering what to do with the mint. One of the scenarios is closure.

Can't believe that I'm reading this! Incredible!

Counting 850 million coins by hands?!?! They gotta be kidding!

Aditya

[eurocoin]

Royal Dutch Mint is the only company that exchanges Dutch 5 euro collectors coins, it will no longer be possible to exchange these coins when Royal Dutch Mint closes and so it will no longer be possible to pay with them (large stores that accept them also exchange them at RDM).

[eurocoin]

On inside footage secretly filmed by an employee, I have seen the particular coins but was unable to spot any quality problems (oxidation spots). The particular employee published the video on his Facebook page.

It's only now that I read in a newspaper article that the Chilean authorities asked the Mint of Chile to do the quality control of the coins. Royal Dutch Mint won the tender and because of that Mint of Chile had to close. That's probably why they rejected the coins because of "quality problems".

Chile Mint is well known for the CHIIE spelling error on their 50 Pesos coins.

[Figleaf]

It is quite appropriate that Brouwer should leave. He is responsible, even when he had no guilt.

On the side, bad quality metal cannot cause oxidation spots on freshly minted coins. Faulty packaging can damage coins before delivery, though. Anyway, the RDM story has no credibility with me as long as they do not sue Chile.

Quite another question is if the mint should close, because its pockets are not deep enough. My firm impression is that the Utrecht mint is internationally competitive as it continually manages to land foreign orders. Therefore, closing it would amount to capital destruction. Whoever is responsible for that should IMHO also leave his job. That would be the minister of finance and by extension the government.

Unfortunately, it is not that simple. The dogmatists of the political right (not known for their intellect, or they wouldn't be dogmatists) will call for closure and the political right is in power, with the ultra-right as its worst threat. Therefore, I tend to share Niels' pessimism.

Voters get the politicians they deserve.

Peter

[eurocoin]

No, low quality metals can for sure also cause oxidation. Oxidation appears when the metal reacts with the oxygen, which in this case means that the particular alloy shouldn't have been used. On the other hand packaging can also cause problems, the (extra) glue that has been used can also react with the coins, though I wouldn't expect that as they have been using it for other coins too without problems. Than still it may have been an outbreak of bronze disease (the ring is made out of bronze). Royal Dutch Mint had been promised that the new packaging machines could handle the 100 pesos coins but that wasn't true. The RDM isn't planning to sue Chile (that would cost a lot of time and money) but they have reached agreements with the authorities in Chile to reduce their losses.

In July 2014 they had only minted a few 100.000 coins out of the total mintage of 850 million. Also only 3 million blanks had been delivered. All of that while the total mintage should have been delivered at the end of 2013/beginning of 2014.

I have heard many people saying "Why did they take such a big risk" well many mints are still facing problems due to the introduction of the euro. When we still had the guilder, the Dutch guilder coins were the only coins that we had for payments. Now 23 countries issue euro coins that can be used in the entire Eurozone and the number of coins that needs to be minted every year has dropped because of that. In the first years there were not yet many problems as in a few years many new euro coins had to be minted for the introduction but now the number of euro coins in circulation is stable and almost no coins need to be minted (compared with the mintage figures of the guilder coins). That's why Royal Dutch Mint needs foreign orders and takes every occasion to make some more money, as the competition on the market is very high they have to submit very low bids to get the tender. What I consider to be very stupid however, is the fact that Royal Dutch Mint only has 2 engravers who aren't very experienced in the designing field. This makes that Royal Dutch Mint is almost always unable to bid on tenders for Coin Design and Minting.

It's sad that mintmaster Brouwer has to quit as mintmaster, however he will stay as adviser at the mint.The mint has had this trouble going on since 2013, so I don't understand why they didn't fully focus on this rather than being busy with making "Mintmaster" an official title in the Netherlands that can only be used by the mintmaster of the Royal Dutch Mint (Last amendment of the coinage act). I also think that too much money is being handed to the high people at the mint, Brouwer earns almost a quarter million euros a year, as has been pointed out on another forum that is 100.000 euros more than our Prime Minister.

On one side it would be good if the Royal Dutch Mint would stay a state participation because the Ministry of Finance would still be able to watch everything that happens there, on the other hand Royal Dutch Mint would have much more possibilities if the shares would be divided under the public and wouldn't need to make very high profits the Ministry of Finance demands. Royal Dutch Mint is incomparably to the other Dutch state participations in terms of profit and cashflow.

I was shocked when I read that the Royal Dutch Mint still only employs 88 people, that used to be over 130 in the past. Most full time employees have been exchanged for cheap (pay peanuts get monkeys) Slavic people who work part-time.

State Secretary of Finance Eric Wiebes is indeed considering to close the mint, which I think wouldn't be good. First of all it's good if we would have the minting of coins  in the Netherlands rather than in some foreign country. Things like happened in France at the Monnaie de Paris in 2001 can also happen at a foreign mint and than we aren't around the corner to pick up the dies and secure the minted coins. Also I consider the mint to be some kind of a status symbol as only small and poor countries let mint their coins abroad.

[Pabitra]

Also I consider the mint to be some kind of a status symbol as only small and poor countries let mint their coins abroad.

It is generally a matter of national priorities.
Denmark and Sweden are not poor countries.
Indonesia and Bangladesh are not small countries ( in terms of population, the major factor affecting number of coins required).

[eurocoin]

It is generally a matter of national priorities.
Denmark and Sweden are not poor countries.
Indonesia and Bangladesh are not small countries ( in terms of population, the major factor affecting number of coins required).

Denmark and Indonesia have their own mints, mint of Sweden has closed a few years ago after 1012 years of minting in Sweden and I consider Bangladesh to be a poor country.

[Figleaf]

For me, it's not an emotional decision but a business decision. There has been a mint in Utrecht for many centuries. Fine, but that doesn't mean there should be one there next year.

There is far too much minting capacity in the euro zone. If the US needs only two mints, the EU can do with only a few (say less than five) mints, even taking into account GNP, population and having more coin denominations. Since there will be cheating, the mints of the largest euro countries will survive the longest, so Utrecht must close eventually. No matter how inefficient the Monnaie de Paris is or how bizarre it is to have five mints in Germany, the Netherlands cannot compete with France or Germany when it comes to maintaining national mint capacity whatever the cost, so it shouldn't waste time or money trying.

The same goes for other "national pride" institutions, including the national airline (KLM is already in the hands of Air France, arguably the worse airline of the two), airplane building (Fokker is gone), car building (goodbye DAF), railroads, telephone network and post (all three still to go or in the process of going). The good news is that none of them will be missed and "national pride" has as yet not suffered.

Having said that, as long as the Utrecht mint is profitable, closing it is a bad business decision. It would cost the Dutch tax payer money. Ministers are not supposed to squander tax payers' money.

Peter

[Pabitra]

Denmark stopped minting their own coins in 2014.

See

http://news.coinupdate.com/denmark-to-discontinue-banknote-and-coin-production-4534/

Indonesia mint makes items other than coins.

The last coin minted by them was 1000 Rupiah in 2010.

I thought the statement was "small AND poor" with logical AND.

Bangladesh may be poor in terms of per capita income but has generated employment for mint employees in Netherlands, Finland, Croatia and Japan in last 5 years.

[eurocoin]

No the statement is:

Poor countries don't have their own mint.
Small countries don't have their own mint.
Wealthy countries have their own mint(s).
Large countries have their own mint(s).

As I have seen many versions of the story in the media, I have asked Ms De Brouwer (researcher for the newspaper which was the first to write about this story) to release further details about the particular FOIA Request that she sent. It seems that they didn't send it to the Ministry of Finance and the Royal Dutch Mint isn't subject to the Freedom of Information Act so that makes me wonder where they got the documents from.

[eurocoin]

The same goes for other "national pride" institutions, including the national airline (KLM is already in the hands of Air France, arguably the worse airline of the two), airplane building (Fokker is gone), car building (goodbye DAF), railroads, telephone network and post (all three still to go or in the process of going). The good news is that none of them will be missed and "national pride" has as yet not suffered.

Besides the -not very funny- jokes about the Royal Dutch Mint going bankrupt, there were a lot of messages about how bad the Royal Dutch Mint would be missed and that the Netherlands isn't doing well at all as it's throwing all of its well known companies, traditions, etc. away, that we were once proud of.

[eurocoin]

Full story below.

Early 2013 the Ministry of Finance started negotiating with Royal Dutch Mint about a new coinage contract. This new contract was needed due to the declining demand of coins, that caused an overcapacity at Royal Dutch Mint. The Ministry of Finance didn't want to pay for this overcapacity. Mid 2013 the concept contract has been presented to Royal Dutch Mint, which they accepted in December of that same year. This contract means that RDM needs to search for new foreign orders. At the end of 2013 Royal Dutch Mint won a tender from the National Bank of Chile for the production of X million coins which has later been incremented to 0.85 billion coins. The denominations of these coins are 1 Peso, 5 Peso, 10 Pesos en 100 Pesos. To be able to meet the requirements that were set in the contract by the Central Bank of Chile, Royal Dutch Mint had to buy new packing machines. These packing machines didn't work well, even after several attempts by technicians they still didn't work properly. The first batch of coins was rejected by the National Bank of Belgium and Spain Mint who were hired by the Ministry of Finance of Chile to do the quality control. The bad packaging had caused oxidation spots on the coins. As the machines didn't work, coins had to be counted by hand. All of that caused that RDM was unable to meet the time limit in the contract, which meant that they had to pay damages to the Central Bank of Chile. Royal Dutch Mint has sued the producer of the machinery that didn't work well. As RDM at the time didn't get paid for the order, they suffer a big loss which consists of the face value of the Dutch euro coins that Royal Dutch Mint has to refund to the Ministry of Finance every quarter. Furthermore Maarten Brouwer has withdrawn from his position as mint master but will stay as adviser. The Ministry of Finance is currently considering what to do with Royal Dutch Mint, which is a 100% state participation.

As the demand for coins has dropped, Royal Dutch Mint and the Ministry of Finance have agreed that since 2013, Royal Dutch Mint is waffling large quantities of coins. This while the storage costs were getting too high. Furthermore large quantities of uncirculated Dutch euro coins have been 'given' to Belgium (eg. 10 cent 2000).

Maybe they should start with selling their 16.7% share of World Money Fair Berlin 

[Bimat]

As the demand for coins has dropped, Royal Dutch Mint and the Ministry of Finance have agreed that since 2013, Royal Dutch Mint is waffling large quantities of coins. This while the storage costs were getting too high. Furthermore large quantities of uncirculated Dutch euro coins have been 'given' to Belgium (eg. 10 cent 2000).

You mean they stored those coins for 16 odd years?!?! What a crazy idea!

Aditya

[Figleaf]

Yup. They built a large warehouse in the middle of a huge polder so they'd have the storage capacity for the old waffled coins. The idea was of course to have them re-melted and sell the metal. However, I suspect that the mint-masters knew too much about metal trading and not enough about bureaucracy.

Raw material prices have been depressed for a long time, especially since 2008. It would have looked like taking a loss to melt the old coins now. However, any unexpected income is a windfall in the eyes of bureaucrats, who live by budgets, not P&L statements.

Peter