Canada has topped the global mining and metals sector as the target destination by total deal value in Q1 2012, says Ernst & Young.

Market uncertainty over past months caused a year-over-year decrease in the deal volume and value of global mining (34%) and metals (20%). But, a strong pipeline indicates mining companies are ready to do business, with 10 megadeals over US$1 billion completed in Q1 2012, up from only five in 2011.

Major deals are driven by the scarcity of quality assets and fierce competition.

The considerable number of smaller deals—the average deal size in Q1 2012 being US$130 million— further reflects an increasing interest in exploration projects.

“The need to secure raw materials, increase penetration in growth markets, achieve greater vertical integration and consolidate market share will continue to drive M&A this year,” says Richard Crosson, partner in Ernst & Young’s transaction advisory services practice.

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He adds, “Canadian mining and metals companies are unwilling to postpone their growth agenda.”