Global mining and metals mergers and acquisitions (M&A) deal value nearly doubled in the second quarter of the year, rising 93% to $7.8-billion, from $4.1-billion in the first quarter of 2016, according to the latest data analysed by professional services firm EY.

The firm adds that deal volumes also increased 27% quarter-on-quarter, with 104 deals recorded, compared with 82 in the preceding three months.

“There is a significant amount of speculation around whether we have finally reached the bottom of the market, and this rise in M&A activity suggests the mining and metals sector may be on the up,” says EY global mining and metals transactions leader Lee Downham.

He points out that mining and metals companies, particularly midtier and major ones, continue to reassess and reduce portfolios to strengthen balance sheets and inject more flexibility into their business models. Downham explains that this, coupled with growing confidence, is translating into increased deal activity.

He further highlights that deal value and volume may be up in 2016, but year-on-year figures reveal the impact of recent uncertainty in the market. Second-quarter deal value is down 51% on the corresponding period last year, while deal volumes only increased 13% over the same period in 2015. Downham attributes this in part to diversified mining group BHP Billiton’s demerger in 2015.

He comments that the Africa region has also seen a significant increase in mining and metals M&A deal value for the second quarter, which increased to $500-million from $73-million in the first quarter of 2016. For South Africa, deal value increased to $163-million from $9-million in the first quarter of 2016.

Meanwhile, Downham notes that deal volume in the Africa region remained unchanged from the first quarter of 2016 at ten deals. He says South Africa recorded an increase of one deal for the second quarter.

EY mining and metals transactions director Quintin Hobbs remarks there has been some commodity price stability return, resulting in a decline in the expectation gaps between buyers and sellers, with a reduced price gap reflected in the rise in numbers for mining and metals M&A deal activity globally and locally.

“There may be further room to indicate a more positive outlook for the sector.” Nonetheless, he says, as mining companies come under increased pressure to close long-delayed deals, shareholder pressure may result in “some interesting annual general meetings” in the second half of 2016.

“This could result in a further upswing in transaction volumes from these disposals,” Hobbs suggests.

Downham states that the theme of strategic divestments continues to dominate the transaction landscape, with China demonstrating an appetite to meet vendor expectations on value for world-class assets.

Hobbs, in conclusion, says that deal activity is likely to further improve over the next few quarters, as the sector adjusts expectations and realigns portfolios in response to the current market conditions.