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.  

September was a busy month for the metals business as it brought with it both 
the co-location of the London and Tokyo-based metals staff with Enron,s 
offices and the first quarter of combined reporting under Enron Europe.  
Ensuring a smooth transition for both the metals staff and the metals systems 
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 
integration team at Enron Europe.  Nevertheless, &D-Day8 arrived with minimal 
problems and the metals team open for business as usual on the morning of 
September 18th.  

Another key initiative that commenced during September was the re-positioning 
of the MG worldwide metals business as Enron Metals. With the exception of 
the Henry Bath & Son Limited warehousing division, which will remain as 
currently named, the re-branding initiative was kicked off in the UK and 
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 regional 
office summary that depicts Enron Metals, 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, core 
business areas and identify those members of the metals team who will be 
leading commercial efforts moving forward. 

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 
copper concentrates and nickel and the leading European merchant of recycled 
non-ferrous metals.  Core activities of the merchanting division are: 

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

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,s physical 
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 Services 
Division will continue to be comprised of brokerage activities for LME and 
COMEX contracts and be a market-maker for both futures and options contracts 
on the LME and COMEX and in OTC metals contracts. 

With much of the metals business moving to online trading, significant effort 
has been put into getting metals contracts incorporated into EnronOnline,s 
portfolio of product offerings since the metals business, integration into 
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. The 
attached charts depict the established metals results compared to the start 
up of US natgas (Appendix II).

Origination

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 integrate 
with existing merchanting and financial service competencies to lever up 
earnings creation.  Currently, the origination team is working on a number of 
Q4 transactions in Australia and the Americas.  The deal pipeline for Q2 has 
prospects in not only these regions but also Europe/Africa and the Middle/Far 
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 shareholder 
value through Enron Metals.  Your active involvement and close co-operation 
here is appreciated.

Warehousing (Henry Bath & Son Limited)  

The Warehousing operations, led by Ed Dablin, operate under the name of Henry 
Bath & Son Limited.  Henry Bath has been in business for more than 200 years 
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 core 
activities include worldwide storage of metals and other products such as 
cocoa, general goods and worldwide shipping services. 

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 (New 
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 
business.



Regards
John Sherriff
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