Such is China\'s voracious appetite for raw materials to feed its rapidly growing economy, that the country is snapping up the obsolete coins and melting them down for their metal content.
The Asian giant, with booming construction and automobile sectors, is scouring the globe for every piece of scrap metal it can lay its hands on - and France is one country that has a ready supply of much-sought-after nickel-containing coins.
\"The stainless steel producers can just put them (the coins) into their furnaces as nickel feed,\" said a trader in China, who added the coins are often tendered by French suppliers.
\"The shipments are usually packed 500 to 1,000 tonnes per lot,\" another Chinese trader said.
China\'s stainless steel demand is predicted to rise to four million tonnes next year from 3.4 million in 2003, analysts said.
Stainless steel, of which nickel is a key component, is a versatile metal used in construction. It also finds its way into cars, appliances and kitchenware.
CENTIMES IN DEMAND
An official at France\'s mint told Reuters China had been a major buyer of French coins since they were replaced by euros as the country\'s legal tender almost two years ago.
He said the mint had not auctioned its coins directly. Instead, it sold them to dealers, some of whom in turn sell to smelters and scrap metal traders.
The old 50-centime coin, almost 100 percent nickel, is proving particularly popular in China, where it is bought as scrap to supplement tight supplies of the main raw material, refined nickel.
Even collectors\' items have found their way into Chinese furnaces. \"We sell special commemorative coins to various shops, which have then sold some of this stock to the Chinese,\" said the French mint official.
Christian de Barrin, spokesman for the Brussels-based European Copper Institute (ECI), estimated around 260,000 tonnes of old European coins would be recycled by 2005 from the beginning of last year.
Germany, the region\'s largest coin user, had almost 79,000 tonnes of old marks and pfennig coins. But like most other EU countries, it sold most within 18 months of the euro\'s launch.
France had around 43,000 tonnes of old coins and still retains a large portion of this total, the ECI said.
Secondary copper producers Norddeutsche Affinerie AG of Germany and Elmet of Spain were the two main companies involved in recycling old European coins, said the ECI.
De Barrin said the 260,000 tonnes of old coins would yield around 150,000 tonnes of copper, 54,000 tonnes of steel and 43,000 tonnes of nickel.
\"The old (French) 50-centime coin contained 100 percent nickel, whereas the five-, 10- and 20-centime coins contained 92 percent copper,\" he said.
China only has its eye on the nickel, which is used as an anti-corrosive additive in stainless steel production.
Chinese traders saw the nickel contained in coin scrap being offered to China at a discount of two to three percent on the London Metal Exchange (LME) cash settlement price.
But Chinese demand for copper-rich coins is much weaker, the traders said. These coins contain only eight percent aluminum and nickel, and separating these metals from the copper is a difficult and expensive process, they said.
Secondary copper smelters in China prefer to import other grades of copper scrap, which are easier to process and relatively cheap, the traders said.
Most of the coins imported by China are already destroyed before clearing customs. Otherwise, Chinese authorities might demand papers certifying they are no longer legal currency.
China\'s nickel importers are not banking on the French mint as a major supplier of the metal for years to come.
Its shipments to China are still limited, the Chinese traders said. They added a growing international shortage of nickel and a 14- year high in the LME three-month price was also making the coins popular among end-users in Europe. LME three-month nickel closed at $13,250 a ton on Wednesday, up $30 on Tuesday\'s kerb close but down from the 14-1/2-year high of $13,415 a ton reached during the day.
In the Chinese domestic market, spot nickel was trading early this week at 121,200-125,000 yuan ($14,638-15,097) a ton, up from 103,000-106,000 yuan two months ago.