The value of Canadian mining and metals deals is down 43% for the first nine months of the year, according to a new Ernst & Young report.
The report found that cost inflation, slowing economic growth, increased geopolitical risk and volatile prices have shifted companies' focus from growth to cost reduction.
"Executives are trading in their 'growth for growth's sake' mentality and refocusing on capital optimization," said Bruce Sprague, Ernst & Young's Canadian mining and metals leader.
He added that nearly a third of survey respondents identified cost reduction and operational efficiencies as key priorities over the next year.
The Ernst & Young report found, however, that confidence in doing deals is on the rise, with 28% of survey respondents expecting to pursue an acquisition in the next year, compared with just 18% in April.
"Expect to see companies move away from diversification and toward synergistic deals that create economies of scale and take advantage of low valuations across the sector," Sprague said.
Companies responded that they would be looking at smaller deals and strategic partnerships.
"While many companies are refocusing on efficiency and cost control, risk management and capital allocation, new transaction opportunities exist for those with strong balance sheets – opportunities that few can afford to miss out on in an era of intense global competition for resources," said Sprague.
