Economic worries, rising costs, geopolitical risk and rising prices have all combined to put acquirers on the sidelines, according to the report released Wednesday.
Ernst and Young said there were 684 merger and acquisition deals in the sector in the first nine months of the year, down from 816 in the same period in 2011, while the total value of the deals slipped to $76.8 billion, down from $133.7 billion.
The average size also fell to $112 million from $164 million a year ago.
"Cost control, risk management and capital allocation have moved to the top of board agendas," the report said.
"As a result, many companies are actively assessing their portfolios. This is reflected by the rising incidence of divestments and non-core asset sales in the third quarter of 2012, a trend that is likely to continue through the remainder of 2012."
Coal deals amounted to $14.8 billion or about 20 per cent of the overall value of the deals, while copper deals amounted to $12.5 billion.
In terms of the numbers of deals, gold was the popular with 227.
Note to readers: This is a corrected story. An earlier version incorrectly stated the average deal size.