China and India’s extraordinary appetite for raw materials is prompting the world’s mining companies to put their pith helmets back on. To meet the demand, they are not just expanding extraction, but getting back into exploration.

BHP Billiton yesterday announced that it will increase its exploration budget to three times what it was five years ago. The other big miners – Rio Tinto and Anglo-American – are also committing more resources to finding new mineral seams and energy supplies. There could be no more vivid, or literal, demonstration of how the world’s two most populous nations are reshaping the planet.

News of an exploration boom may send shivers down the spines of a few investors. It was only ten years ago that a Canadian penny share miner called Bre-X hoisted the greatest petard witnessed in the mining sector, reporting a huge gold seam in Borneo. The value of Bre-X peaked at $6 billion (£3 billion) until it was revealed that geologists had sprinkled the core samples with gold dust.

These days, it is not gold but the more useful commodities such as copper, iron ore and lead that make everything from telephone wires to laptop cases and industrial batteries that are urgently needed in China and India. Acute shortages haveI caused prices on the London Metal Exchange to gyrate wildly.

The mining companies are, once again, dispatching nding explorers en masse because they believe the commodities business has entered a “supercycle” – a surge in demand for metals that is continuing at a stronger pace for longer than the industry has previously witnessed. The companies, which had almost given up the business of finding new deposits, are pushing their geologists to the fore.

There is an old adage that the smart money in a gold rush buys shovels. Investors do have that option: there is a critical shortage of heavy earth-moving equipment and even the huge tyres on which the giant trucks roll are in short supply.

The ravenous demand for metal is no doubt real. So, too, is the cyclical risk of oversupply. Even in an age redefined by Chinese and Indian growth, the possibility of a commodity glut remains.

But, for now, companies like BHP and Rio can no longer afford to wait for a downturn and buy the assets they need from smaller, weaker companies. The market for those assets has dried up. The mining giants have little choice but to seek out new resources in difficult and dangerous corners of the world.

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