Enron Mail

To:enron.1@enron.com, enron.2@enron.com, enron.committee@enron.com
Subject:Enron Metals Update
Cc:robert.soeldner@enron.com, fiona.grant@enron.com
Bcc:robert.soeldner@enron.com, fiona.grant@enron.com
Date:Fri, 10 Nov 2000 07:23:00 -0800 (PST)

In my summer update about the acquisition of MG Plc and the integration of=
the metals business into Enron, I reported that we were aiming to complete=
the integration by the end of the year. I am pleased to report that we are=
well on the way to meeting this target. =20

September was a busy month for the metals business as it brought with it bo=
the co-location of the London and Tokyo-based metals staff with Enron=01,s=
offices and the first quarter of combined reporting under Enron Europe. =20
Ensuring a smooth transition for both the metals staff and the metals syste=
into our London headquarters took a tremendous amount of co-ordination by=
teams across the company on the part of the former MG team and the=20
integration team at Enron Europe. Nevertheless, =01&D-Day=018 arrived with=
problems and the metals team open for business as usual on the morning of=
September 18th. =20

Another key initiative that commenced during September was the re-positioni=
of the MG worldwide metals business as Enron Metals. With the exception of=
the Henry Bath & Son Limited warehousing division, which will remain as=20
currently named, the re-branding initiative was kicked off in the UK and=20
followed by Japan and the US. The re-branding initiative is on going with=
all other remaining regions set to undergo completion of the name change by=
the end of November.

Enron Metals is represented throughout the world. I have attached a region=
office summary that depicts Enron Metals=01, locations (Appendix I).

In light of the progress that has been made since the summer, I thought it=
would be helpful to provide you with a brief recap of Enron Metals=01, core=
business areas and identify those members of the metals team who will be=20
leading commercial efforts moving forward.=20

Merchanting Division

The Merchanting Division, led by Michael Farmer (+44 (0)20 7783 2049), is a=
worldwide copper merchant, one of the top three independent merchants of=20
copper concentrates and nickel and the leading European merchant of recycle=
non-ferrous metals. Core activities of the merchanting division are:=20

? Merchanting of Non-ferrous Metals =01) Enron Metals trades as a principal=
producers and consumers, buying and selling non-ferrous metals and=20
concentrates (particularly copper, aluminum and nickel), exchanging qualiti=
and locations and lending and borrowing metals.
? Global Stockholding =01) Through its affiliate, Henry Bath & Son Limited,=
Enron Metals holds stocks of non-ferrous metals at warehouses around the=20
? Merchanting of Recycled Metal =01) Enron Metals trades as a principal wit=
suppliers and consumers of non-ferrous metal for recycling. Enron has=20
augmented its European recycling platform through the acquisition of assets=
of W&O Bergmann, the leading German Recycling Business. =20

Financial Services Division

The Financial Services Division, led by Michael Hutchinson (+44 (0)20 7783=
2079), provides market-making and trading services to Enron Metal=01,s phys=
metals trading business through futures trading as a member of the London=
Metal Exchange and as a member of COMEX in New York. The Financial Service=
Division will continue to be comprised of brokerage activities for LME and=
COMEX contracts and be a market-maker for both futures and options contract=
on the LME and COMEX and in OTC metals contracts.=20

With much of the metals business moving to online trading, significant effo=
has been put into getting metals contracts incorporated into EnronOnline=01=
portfolio of product offerings since the metals business=01, integration in=
Enron this summer. Today on EnronOnline we are trading six metals (Copper,=
Aluminium, Nickel, Zinc, Lead and Tin) with over 150 products available.

Enron Metals now has almost 800 financial counterparties on the books, with=
300 of these having EnronOnline accounts. Trading volumes have increased=
from a couple of trades per day in September to a high of 300 in October. T=
attached charts depict the established metals results compared to the start=
up of US natgas (Appendix II).


Enron Metals established a London-based commercial unit under the direction=
of Eric Gadd, Vice President-Global Metals Origination which is focused on=
completing highly structured and long-dated transactions. It will integrat=
with existing merchanting and financial service competencies to lever up=20
earnings creation. Currently, the origination team is working on a number =
Q4 transactions in Australia and the Americas. The deal pipeline for Q2 ha=
prospects in not only these regions but also Europe/Africa and the Middle/F=
East. Close and regular communication between the metal origination team=
and other business units inside Enron is essential if we are to succeed in=
building a new capability to achieve earnings targets and deliver sharehold=
value through Enron Metals. Your active involvement and close co-operation=
here is appreciated.

Warehousing (Henry Bath & Son Limited) =20

The Warehousing operations, led by Ed Dablin, operate under the name of Hen=
Bath & Son Limited. Henry Bath has been in business for more than 200 year=
and maintains a global operation for the physical handling and storage of=
non-ferrous metals, including zinc, tin, copper, nickel, lead and aluminum.=
Henry Bath provides support to both the Merchanting and Financial Services=
Divisions, and also engages in independent warehousing operations. Its cor=
activities include worldwide storage of metals and other products such as=
cocoa, general goods and worldwide shipping services.=20

Presently, Henry Bath maintains over three million square feet of storage=
worldwide (most of which is leased), with the largest facilities located in=
the United Kingdom (Liverpool, London, Bristol, Immingham), the Netherlands=
(Rotterdam), Spain (Bilbao, Barcelona), Singapore, and the United States (N=
Haven, New Orleans and Los Angeles).

Rob Soeldner is managing the integration efforts for me. Please feel free=
to contact him at +44 (0)20 7783 7169 with any questions regarding the=20

John Sherriff