A worker walks past a bucket-wheel reclaimer at the Fortescue loading dock located at Port Hedland in the Pilbara region of Western Australia December 3, 2013.
IN PHOTO: A worker walks past a bucket-wheel reclaimer at the Fortescue loading dock located at Port Hedland in the Pilbara region of Western Australia December 3, 2013. Australian iron ore mining seems immune from the spending crunch afflicting other commodities as a slowdown in Chinese growth cools a decade-long mining boom. Rio Tinto, BHP Billiton and Fortescue Metals Group are bulking up in Western Australia's iron-rich Pilbara desert as if the mining boom had never ended. A place where capital expenditure is still measured in the billions. The miners are speeding up transformation of an area the size of Peru into a moonscape of rust-red pits linked via thousands of kilometres (miles) of rail lines to giant iron ore ports perched on the easternmost edge of the Indian Ocean. Picture taken December 3, 2013. REUTERS/David Gray

It seems Australian mining companies and the oil and gas industry need to wait longer before they receive the US$60 billion [$77.8 billion] pool of private equity money as activity in the traditional mining sector remains to be limited. Even private equity players themselves are warning executives not to expect takeovers anytime soon.

According to Ken Hoffman, metals and mining analyst from Bloomberg Industries, patience is a virtue that Australian miners should have. "Waiting has been the buyer's best friend," he said in the Mines and Money conference in Hong Kong last March. "It's a buyer's market and it seems the private equity guys are waiting."

Indeed, some mining companies have already been approached by private equity groups, offering a ray of hope for an industry suffering from a drought in fresh capital and falling commodity prices. For instance, private equity firms Brookfield Asset Management and Macquarie Capital have purchased Apache Corp's Australian oil and gas assets for US$2.1 billion last week. Koch Industries and Pacific Equity Partners have also expressed interest in acquiring Bradken, but it rejected a US$332 million bid, claiming that the proposal "does not represent fair value."

But for most miners, the promise of private equity money seems like a far-off possibility. These firms seldom dabble in the resources sector, and the logic of paying a premium to acquire a mining company just doesn't stack up when the lack of other funding alternatives means that private equity firms can simply wait and step in at the death. After all, private equity firms are perceived as trying to buy companies in an environment where few deals meet their normal investment threshold of at least US$1 billion.

"In addition to being cumbersome in process and being high uncertainty (sic) for a deal to happen, there are fundamental difficulties for leveraged buyouts or taking something private in the resources sector," said Bo Bai from Warburg Pinkus. "Some of our peers have taken private sizeable energy companies and mining companies, and so far the track record speaks for itself. It's been challenging for them."

But one big exception among private equity groups is Mick Davis' X2 Resources, which has already raised US$5.6 billion with which to pursue more deals. If successful, X2's first deal could trigger other private equity firms into mining, hence deploying the pool of private equity money to various mining companies. Brazilian giant Vale's nickel assets and North American gold miner Barrick's copper mines are likely targets of X2.

While the Australian mining sector remains lukewarm, other junior exploration companies from the rest of the world exhibit value and potential amid a struggling global market. For instance, Russian nickel and copper miner Amur Minerals Corporation (LSE:AMC) remains to be debt free in spite of the Russian crisis and supposed nickel glut. Though the company is self-sufficient, it is not discounting the possibilities of a takeover bid, saying that it is "a potentially viable alternative, provided the partner can bring technical and financial support to the table."

Contact the writer: a.lu@ibtimes.com.au