TORONTO (miningweekly.com) – The value of Canadian mining deals fell by 37% and volumes were down by 19% year over year in 2012, but activity is set to pick up in the year ahead, advisory firm Ernst & Young (E&Y) said on Thursday.

"Despite mirroring the global decline in deal value and volume, Canada maintained an 18% share of global mining and metals M&A [merger and acquisition] value and 37% of global volume in 2012. We saw a number of mid-tier and junior executives maintain confidence to pursue acquisitions despite turbulent times – a drive that's set to continue in 2013," E&Y’s national mining and metals leader Bruce Sprague said on Thursday.

The firms latest ‘Mergers, acquisitions and capital raising in mining and metals: 2012 trends, 2013 outlook’ report have found this appetite also contributed to a rise in Canadian outbound investment volume, with many companies pursuing large, cross-border strategic acquisitions to expand existing operations.

Meanwhile, rising costs, softer commodity prices and project execution challenges have mining and metals companies renewing their focus on cost savings, capital optimisation and shedding noncore or underperforming assets until commodity prices recover sufficiently to encourage new investment.

"Mining and metals companies around the world are managing a number of macroeconomic factors. We've seen these factors dampen deal appetite here at home – and abroad," Sprague said.

The report revealed the downturn in Canadian deal value and volume was part of a broader global trend.

Global transactions value declined by 36% and volume by 7% from 2011 – with the lowest number of deals since 2008 and the smallest by value since 2009.

However, Sprague said the E&Y expected to see investment increase at a slower pace, with the majority of Canadian companies doing deals looking to scale-up existing operations by acquiring 'de-risked' assets.

"These companies are also looking close to home for potential targets, with Latin American countries such as Peru, Chile and Mexico at the top of the investment destination list."

The Canada-China Foreign Investment Protection and Promotion Agreement is also expected to reignite Chinese State-owned-enterprise interest in the country's resources sector, as Canada looks to stimulate economic growth in a move that will help offset ailing inbound investment from the US.