While Miners Sink, Japan Rises

Quick: What's the world's fourth-biggest mining business?

If you named a company with a major listing in London, New York or Sydney, you're out of luck. Measured by the gross value of its mining and energy assets, Japan's Mitsubishi Corp. outstrips Rio Tinto and Anglo American:

The country's sogo shosha trading houses are somewhat opaque to outsiders and tend to fly below the radar. But Mitsubishi, Marubeni, Itochu and Toyota's captive trading house Toyota Tsusho comprise four of the 20 biggest companies on the Nikkei-225 by revenue. Sumitomo Metal this week bought a $1 billion slice of the Morenci copper mine from Freeport-McMoRan, in the biggest mining deal since July. With a slew of assets up for grabs as miners attempt to rebuild their balance sheets, it's time the trading houses emerged from the shadows.

The business model is quite straightforward: the sogo shosha worm themselves into every transaction being carried out by corporate Japan, clipping the ticket on each stage of the supply chain that links raw materials to manufacturing, transportation, and finished products. Most have operations in mining and energy, finance and real estate, infrastructure, logistics, chemicals, food and consumer goods. In the commodities field, they already have stakes in coal and iron ore mines, copper pits in Chile and Peru, gas fields in Australia and Indonesia, and even a Mozambican aluminum smelter.

In these times, the sogo shosha have a crucial advantage over the Western mining and energy companies that operate most of their assets: Thanks to their diversity, they can shrug off even a historic slump in commodity prices and keep paying their debts with earnings from non-resource divisions. Mitsubishi's net income has fallen just 14 percent since its 2011 peak, despite a 94 percent slump in earnings from its metals unit.