Back in the Black; Japan's once-powerful trading firms have revived, thanks to the commodities boom.

Byline: Christian Caryl and Akiko Kashiwagi

When the verdict finally came for Akihiko Takada, sitting in a Tripoli auditorium amid an assembly of business rivals, his sense of relief was intense. "It was a close call," he says, recalling the moment last October when LIbyan authorities finally announced that his company, Mitsubishi Corp., had won the bidding for four new big oil projects--barely beating out competitors from India and China and establishing Japan's first foothold in the former rogue state. The company won't say how much it's planning to invest, but the deal is rumored to be a whopper. And that's key to the new energy-focused business strategy being touted by Japan's biggest trading company.

Which might lead some to ask: what is a Japanese trading company doing bidding on an oilfield project? For most of Japan's postwar era its mammoth traders made their reputations as suppliers, brokers and middlemen, not as project developers. But a lot has changed since the early 1990s, when companies like Mitsubishi and its brethren, including Mitsui, Sumitomo, Marubeni and Itochu, accounted for an estimated 5 percent of the country's GDP. Back then they were still tightly linked with industrial conglomerates, the notorious keiretsu , which fed them cheap loans in return for assured supplies of crucial raw materials. Revenues were massive, profit margins tiny. Investments were usually limited to acquiring minor stakes or, at best, a bit of project financing.

What a difference a decade makes. These days, after bearing the brunt of the country's 15-year economic slump, the big trading companies are back in business with a vengeance. Like the rest of Japan Inc., they've gone through ruthless restructuring, cutting staff, jettisoning subsidiaries and in some cases breaking out of the gilded keiretsu cages that once made their businesses stable but inflexible. These days, rather than just selling goods or mediating deals, the companies are acting as investors--buying up assets or exploration rights, and in some cases striving for complete control of major projects.

The strategy is all about embracing and managing risk--not that they have much choice. Across the globe, from Mongolia to the Gulf of Mexico, competition from resource-hungry India and China is forcing the sogo shosha , as they're called, to join the global scramble to lock in supplies of everything from sugar to palladium. Ironically, that same frantic demand is driving a surge in world commodity prices, which, in turn, is boosting the traders' bottom lines to unheard-of heights even as other Japanese firms struggle with rising costs.

The scale of the transformation became clear last week, when Japan's five leading trading companies announced record earnings for the past fiscal year. One example, Marubeni, a company that has spent most of the past few years struggling to divest itself of bubble-era debt and unprofitable subsidiaries, saw its profit rise 79 percent over the previous year. Mitsubishi, by far the strongest trading company, announced its third straight year of record earnings. Its net profit grew by 92 percent over the previous year, reaching A[yen]350 billion ($3 billion). And oil is just part of the story. The company received massive boosts from metals and, most notably, the distinctly unglamorous business of coal. Some 28 percent of Mitsubishi's profit came from its Australian coking-coal subsidiary. (Coking coal is the special coal that's crucial to steel production.)

Another boom sector for the traders: uranium. "Japan is joining the global rush for uranium to fuel its power plants," says Masaki Hisane, a Tokyo commentator on international business and foreign policy. He points out that the high price of oil is rejuvenating Japan's ...