Mergers and acquisitions in Australian mining are at their lowest level in 10 years.

Analysts at Ernst & Young say neither buyers nor sellers are keen to do deals, and mine management is finding it hard to justify major acquisitions to shareholders.

The value of such deals in Australia were down to $US4.7 billion in 2014, down from $US5.5 billion in 2013.

But there is a similar story playing out in international numbers, with deal values falling to 10-year lows of $44.6 billion.

“Volatility and uncertainty will continue to constrict deal activity until price stability, and in turn, confidence, returns,” Paul Murphy, head of EY's mining and metals deals for Asia Pacific, told Fairfax Media.

But "standing still is not an option" he says, as many companies will seek to access a huge build-up of private capital earmarked for investment in the mining sector in the past two years.

The EY analysts say buyer-seller disparity is killing potential deals.

“Those seeking acquisitions [are] wanting to factor in the risk of potential downside exposure that sellers simply aren't prepared to wear,” the EY report said.

“In the current market, there is relatively little buy-side pressure – there is no huge rush to invest capital into the sector –or competition for assets that may be undervalued by the market.

“Similarly, there is little sell-side pressure – shareholders are not necessarily looking to exit right now as they believe stocks are undervalued and any offer, if solicited, would be at a discount to where shareholders believe the stock will trade in an improved market.”

The "misguided perception" that mergers and acquisitions hurt value is making shareholders and management adopt a zero-tolerance strategy to it, EY says.

"Acquisition options have often been taken off the table because of the significant impairments that have followed deals in recent years, and the stigma attached as a result," Mr Murphy said.

"This overlooks the huge returns that some acquisitions created earlier in the cycle, and the short payback that a deal, if executed well, may generate overall compared to investing in a portfolio asset. Given the sector is now back to the lowly M&A levels of 10 years ago, the question is when to move, as the rule of thumb tells us that the early movers will create the most value."