M&A in the global mining and metals sector is likely to remain subdued for the remainder of 2014 despite a strong deal pipeline and a private capital funds war chest yet to be unleashed, according to EY Global Mining & Metals Transactions Leader, Lee Downham.

EY's quarterly M&A analysis shows 112 deals in the sector during Q2 this year totaling USD 9.5 billion. Deal volume was down 21% on the previous quarter and down 41% on the same quarter in 2013. Total deal value was up 33% on the previous quarter, primarily due to the USD 3.6 billion acquisition of Osisko Mining Corp. by Yamana Gold and Agnico Eagle Mines.

Similarly, 1H comparisons show total deal values down 69% year-on-year to USD 16.7 billion from USD 53.8 billion, the fourth consecutive year of decline. Deal volumes for 1H 2014 were down 34% to 254, from 386 in 1H 2013.

Downham said, "Deal making in the sector continues to be cautious, partly due to the continuing commitment to capital discipline, but also due to a lack of urgency over investment given the lack of competition for assets."

"Some standout deals and hostile bids during Q2, combined with a strong deal pipeline and substantial capital waiting to be deployed by mining-focused funds, suggest that momentum is building. For those brave enough to invest against the cycle there would appear to be good buy-side opportunities."

"We do however think divestments of non-core assets from the majors will pick up pace in the next six months. While these assets may not be strategic to the divesting companies, they are typically high-quality assets and will likely attract strong competition, particularly from private capital buyers. Acquisitions by financial investors accounted for 20% of all mining and metals deal volumes globally in 1H 2014," Downham added.