Another wave of mining contractors is expected to go under as iron ore and coal prices continue to decline and miners cut costs.

Major accounting firm Ernst & Young says it expects a major shakeup in the mining services industry, affecting contractors who provide services to mining companies like drilling, transport and logistics.

Big mining services firms such as Boart Longyear have already shed thousands of staff as the mining investment boom has peaked.

Three ASX-listed companies collapsed including Forge and Allmine, and four other companies merged or were taken over with the number of mining services firm dropping by 8 per cent.

Ernst & Young partner Vince Smith said the industry had been hit hard by the downturn.

But he warned that lower prices for commodities like coal and iron ore, reduced spending by miners and high debt levels were likely to force more companies out of business.

"We think there are further tough times ahead probably for the next few years," he told the ABC.

"For the work that's now available there are probably too many competing for it."

Mr Smith said smaller, unlisted companies were likely to be the hardest hit.

"The smaller ones don't have strong enough balance sheets, they don't have the ability to withstand too much more pressure from a cost and profitability point of view," he said.

"They only really need one contract to go wrong or bad for them and that can have quite a significant impact on their business."

There are an estimated 300 to 400 sizeable unlisted mining companies in Australia.

Mr Smith said surprisingly the 77 mining services companies listed on the stock exchange had increased their market value over the past year.

But debt levels of $20.6 billion for contractors on the stock exchange is near record highs.

"There's fewer competitors but at the same time we believe that those competitors that are still there have diversified their services so they are not completely focused on mining," he said.

Mr Smith said contractors had moved away from mining into infrastructure, civil engineering, government and utilities work.