The international mining industry saw mergers and acquisitions slow in 2012.

Accounting firm PricewaterhouseCoopers said that a total of 1,803 M&As were reported in the international mining sector last year, down 30% from 2011 and the lowest level since 2005. The total transaction value was USD 110 billion down 26% from 2011. The slowdown has continued this year.

Over the past 2 years, commodity prices have fluctuated greatly, affecting investor confidence. Many in the industry believe that a period of fast growth for miners has reached an end. Companies have started to switch their focus from expansion to improving operating efficiency and cutting costs in order to improve their financial standing. Chinese miners, the most active players in international mining acquisitions since 2009 have also become more cautious about new deals.

Since September 2011, the price for high grade iron ore has fallen from US$ 180 per ton to USD 110. Prices for other commodities, like copper, aluminum and nickel, have also declined dramatically.

Frequently changing prices have made it difficult for companies to reach agreements in mining deals. Meanwhile, previous rapid expansion has boosted costs for project development, bringing higher risks to acquisition deals.

A report by Ernst & Young predicted that miners' enthusiasm for acquisitions will revive only after the commodity prices rebound and companies' capital pressure is alleviated.

Mr Richard Phillips, Goldman Sachs' head of natural resource M&As in Australia and New Zealand said that low profit margins have restricted companies' new investment projects and made them more willing to focus on existing projects.

Mr Phillips said that "As prices have remained low, large mining companies can continue operations because they have larger profit margin. But smaller companies will be more affected due to their higher costs."

Mr Andrew Michelmore CEO of MMG Limited said that the country's leadership transition and the reshuffle in ministries and state owned enterprises have also hindered companies' business decision making.

Speculation on rising demand from China has boosted the global mining sector but Mr Zhu Hansong director of the natural resources division of Goldman Sachs Asia Pacific said that there are many uncertainties ahead. The global supply of iron ore will exceed actual demand in 2014, while the outlook for copper is also not quite optimistic.

Mr Wang Jianjun deputy director of the Department of Foreign Capital and Overseas Investment under the National Development and Reform Commission said that Chinese companies have invested more than USD 10 billion in overseas iron ore assets over the past five years, mainly in West Africa, Canada and Western Australia, securing about 20 billion tonnes of ore supply. However, most of the investments are still in the early stages of development.

He said that "Many purchases are mining rights and require further exploration and feasibility studies, as well as environment assessments. Much capital is needed in the early stages of development and many companies have encountered problems. The lack of infrastructure and supportive facilities are major restrictions for the country's overseas mining projects. "Some places lack railway and port capacities, while others need to build new infrastructure.