FLOATS, mergers and acquisitions have dried up in the mining and metals sector because of the faltering world economy.
The number of transactions begun globally in the March quarter fell 34 per cent below that for the first quarter of 2011. Deal value was down 20 per cent.
Figures compiled by Ernst & Young showed almost 300 transactions took place in the March quarters of 2010 and 2011, but this slumped to 195 this year. Total value fell from $US31 billion in the first quarter of 2011 to $US25 billion this year.
Canada led the world in terms of value for mining and metals transactions.
Ernst & Young spokesman Lee Downham said there was cause for some optimism, particularly with the massive proposal to merge Glencore and Xstrata still in the pipeline for 2012. Small miners continue to struggle to find finance, with just 17 mining and metals stocks floating in the first three months of the year. This was well below the 28 in the December quarter and the 31 in the March quarter of 2011.
Applications for five mining floats have been withdrawn recently. Yulleba Resources pulled its float despite seeking only $3 million and working in commodities gold and iron ore that are near record high prices.
Energy floats have fared better in Australia. Oil player Pura Vida raised $4 million
in February at 20? a share. Within a month the stock was selling at 40?.