A number of pieces of on going litigation and arbitration being conducted on 
behalf of EML and EMC have very recently come to our attention which we 
summarise below. We have endeavoured to establish the detail of these cases 
as quickly as possible, but in some instances await information from outside 
counsel involved. The summary is therefore necessarily provisional, and will 
need to be supplemented. There are in addition other claims of which we have 
been made aware, largely being run by MG Hong Kong and Beijing offices. 
Details are presently so sketchy that we have not included them until we have 
been able to verify. A supplementary note on these will follow asap.

1. Corporacion Nacional del  Cobre de Chile ("Codelco" )  v.  MG Ltd, MGAG 
and MGCC

This is a major, and very serious claim being brought by the Chilean state 
copper trading company Codelco against, primarily MG AG of Frankfurt, but 
also against MG Ltd (now Enron Metals Ltd) for recission of futures contracts 
on the basis that they were procured by fraud (a bribe of US$1.5m paid to the 
main Codelco trader by MGAG). We have received a brief summary of the claim 
from Slaughter & May, the lawyers handling the litigation on behalf of EML, 
which is attached below. As a result of an indemnity from MG AG, MG Ltd has 
NO financial exposure other than a credit risk to MG AG.

Legal professional privilege must of course be maintained for this document 
and its contents, and any dissemination outside the legal dept should be made 
subject to prior approval by legal.

Trial is set down in the Chancery Division of the High Court in London for 
5-6 weeks, commencing October 2001. Significantly, and as you will be aware, 
High Court proceedings take place in public.

 - LT010810084_3.doc


2. MG Ltd v. China Resources National Corporation

Claim in LME arbitration for payment of US$6m futures losses on client 
contracts. Award published in favour of MGL on liability alone in August 
2000. Damages to be assessed. Thereafter Award to be enforced in China. 
Solicitors: Clyde & Co.


3. MG Ltd v. London Clearing House

Claim in LME arbitration for delivery of defective tin under warrant. Losses 
believed to be US$800,000. 7 day time bar defence run by the LCH heard as 
preliminary issue. Award in approx Feb 2000 in favour of MG (ie time bar 
inapplicable). This has led to resumption of settlement negotiations with 
Standard Chartered Bank (trading), who put the metal onto warrant originally 
(and against whom the LCH would have an indemnity claim). The most recent 
offer from Standard Chartered is to pay US$437,000; but this is subject to 
unacceptable conditions. Solicitors: Allen & Overy.

4. Nickel explosion in furnace in Cleveland: Scandia Transport  
LMEWarehouse/LCH/EMC/Phoenix /EAC/ Cast Alloys (smelter)

Contaminated nickel supplied by EMC into the US. Amount of loss being 
established now. Incident much less bad than initial reports suggested, and 
have therefore deferred explosion survey/investigation lined up on urgent 
basis earlier this week. Expect indemnity claim to be brought against EMC by 
Phoenixx in LME arbitration; and to pass same claim on to the LCH. Assume 
possibility of US tort claim also lying direct from Smelter to EMC (awaiting 
advice from Limor Nissan/Andy Edison on this). Facts should become 
sufficiently clear to enable rough quantification within next week (w/c 26/3).

NB. Other similarly contaminated shipments from the same warehouse are known 
to exist. Warnings to other customers are being prepared.

5. LME arbitration: Chinese receiver/ICD/Brandeis/EMC/EML/LCH/Warehouse

Claim brought by Chinese receivers for supply of defective nickel on LME 
warrant bought through London clearing. Only US$62,000 claim, but involves 
significant point of principle, hence decision taken to proceed in 
arbitration. Should in principle be able to pass on incoming claim to LCH 
(and beyond). Expect unrecoverable costs (internal and external) to exceed 
the amount of the claim. Solicitors to be instructed w/c 26/3.