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Equinox Minerals Ltd.'s copper plant in Lumwana, Zambia.EQUINOX

The frenzied pace of deal making that has defined the mining sector since last fall has turned to near paralysis in recent weeks amid growing worries that the global economy is stumbling and China is losing its once-strong appetite for metals.

Deal makers describe what amounts to a buyer's strike in the sector and a slowdown of financings as companies sit on the sidelines to see if commodity prices will continue to wane, which could mark the peak of the current cycle that has been climbing steadily since the 2008 global market meltdown.

The first major sign that deal making has tapered off came last month when Lundin Mining Corp. announced it couldn't find an acceptable buyer for all or parts of its copper, nickel and zinc mines across Europe and Africa. There was a gulf between the value Lundin believes its company is worth, based on a string of rich-premium deals in the sector amid record-setting prices, and what buyers were willing to pay now that markets have cooled off in recent weeks.

Interviews with mining industry executives, bankers, and lawyers paint a picture of companies unwilling to make a move in the current uncertain market. None of the deal makers would speak publicly about their plans, but confirmed that some potential deals are in limbo until more clarity comes as to which way markets are headed.

Add to that a rise in resource nationalism, in which mineral-rich countries such as Chile, Australia and more recently Peru and possibly Tanzania are considering taxes on miners, and the result is increased risk that is also weighing on the value of many mining stocks.

"Nobody wants to be the deal done at the top of the market that everyone points to," said Stifel Nicolaus analyst George Topping.

That is what happened to Teck Resources Ltd. and Rio Tinto PLC when each company made highly leveraged acquisitions just before the global financial crisis, and spent months during the recession trying to pay down huge new debt loads.

The last major mining deal struck was Barrick Gold Corp.'s $7.3-billion friendly offer for pure copper producer Equinox Minerals Ltd. in April. The world's largest gold producer won Equinox by topping a $6.3-billion hostile bid from China's Minmetals Resources Ltd. Minmetals backed down within hours of Barrick's offer, calling it too pricey to match.

That signalled there is a limit to how high even the deep-pocketed Chinese will pay for assets, despite a goal of securing more resource assets to help fuel demand for its strong and steady industrial expansion.

Although Chinese consumption is expected to continue propping up prices for metals such as copper, aluminum and nickel, there are concerns about weakening demand as the country tries to curb growth to prevent its economy from overheating.

Copper imports in China fell 25 per cent in the first five months of this year from the same period in 2010, while aluminum was down 11 per cent, economists at Capital Economics in London noted recently.

While this doesn't necessarily mean prices will continue to fall, the economists noted that despite China's rapid growth, its "need to import many important commodities can and often does fall substantially for prolonged periods. In the case of copper in particular, stocks may already be more than ample after the surge in buying in 2009."

If Chinese consumption of metals falls, prices will inevitably follow suit. That could create a buying opportunity for mining companies. However, sellers will be reluctant to let go of their assets at lower prices. It's that standoff that will continue to prevent some potential deals from being struck.

"We did start the year with a bang," said Vanessa Iarocci, a vice-president in the deals group at PricewaterhouseCoopers, citing such major acquisitions as Barrick's bid for Equinox and Alpha Natural Resources' $7.1-billion (U.S.) purchase of Massey Energy.

The first five months of the year saw 924 deals in the mining sector worth $57-billion, compared with 877 deals worth $35-billion for January-May of 2010, according to PwC statistics.

Ms. Iarocci said the pace has slowed recently because of uncertainty about demand for commodities when government stimulus packages run out, combined with debt woes in Europe and weaker-than-expected job figures in the United States, which could stall global growth.

"Over all, there's a bit of a feeling of a slowdown because we've seen a lot of weak macro data coming out in the last month," she said.

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