Since late June, without a headline to announce the event, the big four of world mining, BHP Billiton, Rio Tinto, Glencore Xstrata and Anglo American, have all enjoyed share price rises of about 14%.

Given that a percentage rise of that size, even if coming up from 12-month share price lows, adds more than $30 billion to the collective stock market value of the big four, and that it occurred over just 23 trading days, it can be seen as a significant development.

Before looking at what’s driving the recovery at the top end of the industry, if not yet at the smaller and or among the cash-starved explorers, it’s worth considering a few facts.

In the case of BHP Billiton, the biggest miner in the world, its Australian-listed shares have risen from a low of $30.43 on June 25 to a closing price last week of $34.60, a gain of 13.7%.

Rio Tinto, over the same time, rose from $49.81 to $57.24, up 14.9%, while on the London Stock Exchange, Glencore Xstrata and Anglo American have also risen by around 14% since hitting a bottom in late June.

The upward trend is so consistent that there can be no doubt that an industry-wide event is occurring with the driving force being a rotation of institutional funds back into the mining sector because it is seen as offering better returns than alternatives.

As a simple measure of how attractive the big miners have looked over the past month, compare their 14% share price rises with a 7% increase in the ASX All Ordinaries over the same time.

In other words, the miners have delivered double the average return, which in Dryblower’ world is enough to whisper (but not shout) the boom word.

Now for an explanation as to why it is happening and an attempt to forecast which of the big companies will continue to rise, and which might fall back after the euphoria of the general recovery.

The reason institutions have shifted money back into the mining sector is largely in pursuit of the profits and dividends which will flow courtesy of two significant changes made by the new management teams at the big four over the past six months – no more new projects, and deep cost cuts.

In other words, the boom we’re watching today is a financial markets event not a mining event.

It is, to put it crudely, a time that may be called “the revenge of the shareholders”

Over the past 10 years management at all mining companies pursued growth at the expense of shareholder returns because there was a commonly held belief that global demand for minerals and fuel would continue to expand rapidly.

Today, there is a realisation that demand for commodities is slowing, that costs have got out of hand, and it’s time to slow down, trim down, and start returning profits to shareholders rather than employees and service providers.

It is the lure of increased dividends which lies behind the mini-boom as cost cutting starts to deliver the higher profits demanded by investors.

There is, however, an obvious problem with a recovery led by cost-cutting and that is the natural limit that must be reached when costs are cut to the point where the operations of a business start to be effected.

So, the game over the next six to 12 months is judge which of the big miners has the most fat to cut without damaging its business, and which miner can make the cuts without stirring up a political hornets nest.

Dryblower’ tip for the winner of the cost-cutting game is BHP Billiton, because it is the company with the highest quality projects, the ones that can tolerate low commodity prices for the longest.

Rio Tinto will be the second-best performer during the cost-cutting drive, while Glencore Xstrata and Anglo American will do worst because of their relatively high-cost operations and exposure to riskier countries.

The big challenge for management is to judge when cost-cutting has reached a point where to go further risks the viability of a business unit.

In most cases, that point has not yet been reached, which is why the cost-cutting share price boom might last a little longer but will almost certainly run out of steam before the end of the year.

What happens after cost-cutting reaches a painful point becomes the interesting question because that’s when asset quality and political risk will be the major drivers, meaning that it is likely the BHP Billiton and Rio Tinto will start to outperform Glencore Xstrata and Anglo American.