Message-ID: <27472342.1075859661565.JavaMail.evans@thyme>
Date: Fri, 10 Nov 2000 07:23:00 -0800 (PST)
From: enron.announcement@enron.com
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
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In my summer update about the acquisition of MG Plc and the integration of=
=20
the metals business into Enron, I reported that we were aiming to complete=
=20
the integration by the end of the year. I am pleased to report that we are=
=20
well on the way to meeting this target. =20

September was a busy month for the metals business as it brought with it bo=
th=20
the co-location of the London and Tokyo-based metals staff with Enron=01,s=
=20
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=
ms=20
into our London headquarters took a tremendous amount of co-ordination by=
=20
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=
 minimal=20
problems and the metals team open for business as usual on the morning of=
=20
September 18th. =20

Another key initiative that commenced during September was the re-positioni=
ng=20
of the MG worldwide metals business as Enron Metals. With the exception of=
=20
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=
=20
all other remaining regions set to undergo completion of the name change by=
=20
the end of November.

Enron Metals is represented throughout the world.  I have attached a region=
al=20
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=
=20
would be helpful to provide you with a brief recap of Enron Metals=01, core=
=20
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=
=20
worldwide copper merchant, one of the top three independent merchants of=20
copper concentrates and nickel and the leading European merchant of recycle=
d=20
non-ferrous metals.  Core activities of the merchanting division are:=20

? Merchanting of Non-ferrous Metals =01) Enron Metals trades as a principal=
 with=20
producers and consumers, buying and selling non-ferrous metals and=20
concentrates (particularly copper, aluminum and nickel), exchanging qualiti=
es=20
and locations and lending and borrowing metals.
? Global Stockholding =01) Through its affiliate, Henry Bath & Son Limited,=
=20
Enron Metals holds stocks of non-ferrous metals at warehouses around the=20
world.
? Merchanting of Recycled Metal =01) Enron Metals trades as a principal wit=
h=20
suppliers and consumers of non-ferrous metal for recycling.  Enron has=20
augmented its European recycling platform through the acquisition of assets=
=20
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=
=20
2079), provides market-making and trading services to Enron Metal=01,s phys=
ical=20
metals trading business through futures trading as a member of the London=
=20
Metal Exchange and as a member of COMEX in New York.  The Financial Service=
s=20
Division will continue to be comprised of brokerage activities for LME and=
=20
COMEX contracts and be a market-maker for both futures and options contract=
s=20
on the LME and COMEX and in OTC metals contracts.=20

With much of the metals business moving to online trading, significant effo=
rt=20
has been put into getting metals contracts incorporated into EnronOnline=01=
,s=20
portfolio of product offerings since the metals business=01, integration in=
to=20
Enron this summer.  Today on EnronOnline we are trading six metals (Copper,=
=20
Aluminium, Nickel, Zinc, Lead and Tin) with over 150 products available.

Enron Metals now has almost 800 financial counterparties on the books, with=
=20
300 of these having EnronOnline accounts.  Trading volumes have increased=
=20
from a couple of trades per day in September to a high of 300 in October. T=
he=20
attached charts depict the established metals results compared to the start=
=20
up of US natgas (Appendix II).

Origination

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

Warehousing (Henry Bath & Son Limited) =20

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

Presently, Henry Bath maintains over three million square feet of storage=
=20
worldwide (most of which is leased), with the largest facilities located in=
=20
the United Kingdom (Liverpool, London, Bristol, Immingham), the Netherlands=
=20
(Rotterdam), Spain (Bilbao, Barcelona), Singapore, and the United States (N=
ew=20
Haven, New Orleans and Los Angeles).

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



Regards
John Sherriff