How Will Vale (VALE) Stock React To Zambia’s Relaxed Copper Export Tax Rules?

NEW YORK (TheStreet) -- Vale SA (VALE) and other copper miners will no longer have to present the government of Zambia with import certificates from destination countries, as the country has decided to relax its tax rules on copper exports, the Wall Street Journal reports.

Zambia is easing its export rules as submitting documentation outside of the country's jurisdiction has proven hard to do.

The country's copper miners have been seeking $600 million in unpaid tax refunds, which the government said it would pay, only if the companies presented the import certificates, the Journal added.

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Zambia imposed the tax rule in an effort to improve transparency and revenue collections from the copper mining sector, but executives argued that providing the certificates was almost impossible, as buyers will often sell the product to third parties, the Journal noted.

With the tax rule eased, negotiations over the $600 million are expected to begin within a few days.

Shares of Vale are up 0.07% to $13.64 on Tuesday morning.

Separately, TheStreet Ratings team rates VALE SA as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate VALE SA (VALE) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • VALE's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 4.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 1113.0% when compared to the same quarter one year prior, rising from $117.72 million to $1,428.00 million.
  • VALE SA reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VALE SA reported lower earnings of $0.01 versus $0.94 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $0.01).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, VALE SA underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • In its most recent trading session, VALE has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
  • You can view the full analysis from the report here: VALE Ratings Report

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