M&A volume was up by 36% year-on-year, and by 12% over the June quarter to 121 deals, according to EY research.

The top three acquirer companies by deal volumes were Canada, Australia and China, with gold making up 59% of Canadian deals and 44% of Australian deals.

China was the biggest dealmaker by value in the third quarter as the target of $US2.4 billion in transactions and the acquirer in $3.8 billion worth of transactions ¾ representing 29% and 48% of respective global totals.

That was mainly attributed to China Molybdenum’s $1.5 billion acquisition of Anglo American’s niobium and phosphate assets in Brazil.

“The robust M&A deal volumes indicates that many in the sector are regaining confidence following a sustained period of lower pricing which has resulted in more deals being completed,” EY Asia-Pacific Mining & Metals transaction leader Paul Murphy.

However, deal value was down by 40%.

“Although far off the peak of the super cycle, the stabilisation of commodity prices has meant people have more trust in the price assumptions that are critical for valuing potential acquisitions,” Murphy said.

“More recently pressure has eased off sellers with excess cash being utilised for debt reductions.”

Capital raised in the sector was also buoyant, with value up 53% to $50 billion and volumes up 60% compared with the same quarter last year.

The most notable Australian deals was Evolution Mining’s $A880 million acquisition of a 30% stake in Ernest Henry, and Glencore’s sale of its rail assets.

“Many of the deals being structured still have an upside for the seller in the event prices move higher,” Murphy said.

“For example, the Australian coal deals are being driven by the nation’s position as a high quality producer as countries continue to focus on coal quality.”

M&A is expected to continue to increase next year in light of higher commodity prices.

“Buyers are unlikely to be paying full value for these higher commodity prices at the moment, however if they remain higher for a period of time, it could provide an opportunity for miners to derisk their portfolios by bringing in new investors,” Murphy said.

“We are seeing many key investors currently willing to take minority stakes in high quality mines.”

Despite the outlook, many miners were in a much stronger position after clearing debt, cutting costs and divesting non-core assets.

 

“As the sector becomes increasingly adept at managing volatility, we will see corporates begin to consider strategies that are more focused on future growth,” Murphy said.