Brazil were the leaders in mining deals for 2008 with China close behind even with thre industry experiencing a violent downward tailspin with many companies spending the earlier part of the year doing deals or resisting unwelcome overtures and welcoming back potential buyers with open arms in the last quarter.

Releasing the mining deal report for 2008, PricewaterhouseCoopers said that the most significant surge in deal activity came in Brazil with total deal value in South America rising dramatically from $8.7 billion in 2007 to $ 22.8 billion in 2008, of which Brazil accounted for deals worth $17.7 billion – up nearly fivefold from $3.6 billion in 2007.

A large increase was also seen in deals involving Chinese buyers with the value of deals rising fourfold from $6.7 billion in 2007 to $25.5 billion in 2008.

Deals involving Chineses acquirers is continuing and, in fact, rising in 2009 with the controversial $19.5-billion deal between Chinalco and Rio Tinto announced in February (See: Chinalco invests $19.5 billion in Rio Tinto to raise stake to 18 per cent), China Minmetal's $2.5-billion bid for Oz Minerals and Hunan Valin's $770 million investment in Fortescue. (See: China invests heavily in Australian miner-Fortescue)

Kameswara Rao of PricewaterhouseCoopers', said that ''We see a unique environment that will reshape much of the sector's ownership. The rapid decline in commodity and equity prices, combined with the financing constraints with the global credit crisis, has left the sector polarised between the strong and the weak.''

''Indian mining and user industries have an unprecedented window of opportunity to gain access to targets that might be denied to them in normal circumstances. The raw material supply constraints are likely to persist in the Indian market, and as Indian mining operators are more closely integrated with end-use, the current lower valuations help then secure cheaper supplies for future. This may be just what the local brave hearts are looking for.''

PwC's Mining Deals 2008 highlights how the industry experienced a 'violent downward tailspin' in the space of a few months, turning much of the deal-making in the sector upside down as deal volumes plummeted 61 per cent in the fourth quarter of 2008 towards levels last seen in 2005.

Many companies that had spent the earlier part of the year doing deals or resisting unwelcome overtures finished the year looking at overstretched balance sheets, preparing for write downs, and welcoming back potential buyers.

With regard to developments in the Indian market, Rao said, ''We expect the constraints and contrasts in the market will create their own impetus for deal activity. Companies with required resources see in the current environment a buying opportunity although many may be content to bide their time for the right conditions to emerge. The state owned entities have the balance sheet strength but must work on their assessment and decision-making processes.''

''The boom period has attracted a number of small to mid-cap mining companies for whom access to equity and debt has dried up. Many are at an entry or development stage and now risk survival. This is a good opportunity for the government to further liberalise the domestic mining industry to grow it, attract investment, and reduce costs for user industries such as in metals and energy.''