With governments worldwide having implemented financial and economic policies to stimulate growth, the global economy showed encouraging signs during the year that it was continuing with its recovery from the adverse effects of the global financial crisis. This general improvement has benefited many industry sectors and driven increased demand for energy and natural resources including oil and coal. The improved market conditions and the Group’s continuing efforts to reduce operating costs have enabled the Group to achieve better results for the year notwithstanding the need to provide for a significant asset impairment loss in respect of some of the Group’s assets. Although there remains some cautiousness over the sustainability in the recovery of global markets and economies and despite anticipated rises in operating costs, the Group continues to be well positioned to implement its business strategy and to seek to enhance shareholder value.

In 2010, the Group’s revenue grew by 66% to HK$32,252.3 million. Profit attributable to shareholders was HK$1,101.7 million, representing an increase of 8.5 times from the previous year. Earnings per share was HK 18.21 cents, compared with HK 1.91 cents in 2009.

The Group achieved a satisfactory financial performance for 2010.

During the year, the Group successfully completed the spin-off of its manganese business through an offering and separate listing of the shares of CITIC Dameng Holdings Limited (“CDH”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). A significant gain was recognised by the Group in respect of its interest in CDH as a result of the spin-off and separate listing of CDH. The separate listing of CDH allows the Group to place greater focus and concentrate its resources on its core businesses such as oil and coal which are strategically important for the Group’s future growth.

The Group’s oil assets represent a significant part of the Group’s investments and performed steadily during the year. There was an overall improvement in performance from the Karazhanbas oilfield in Kazakhstan as a result of stable production of about 35,500 barrels of oil per day being maintained and supported by an increase in oil realised prices of 22% on average in 2010 as compared with 2009. The Group continues to gain experience in the exploitation of oil from the Karazhanbas oilfield and a better understanding of employing enhanced oil recovery methods there such as cyclic steam stimulation and steam flooding to produce oil at more efficient and sustainable rates and to enhance the production outlook of the Karazhanbas oilfield. An asset impairment loss in respect of the Karazhanbas oilfield has been recognised by the Group as a result of the imposition of a new export duty in Kazakhstan and a downward revision of the estimate of original oil in place in the Karazhanbas oilfield which has an impact on the estimates of total oil commercially recoverable from the oilfield.

The performance of the Group’s interest in the Seram Island Non-Bula Block continues to lag the Group’s projections. The Group drilled new wells to enhance production and carried out necessary repairs to existing wells where production has fallen as a result of their natural decline.

In relation to the Yuedong oilfield in the Hainan-Yuedong Block, PRC government approval was obtained in respect of the overall development plan in August 2010 and this enabled the Group to commence pilot production during the year. In 2010, the Group started the construction of three additional artificial islands, and construction of production facilities thereon is scheduled to complete by late 2013. The commencement of pilot production at the Yuedong oilfield marks a milestone for the Group’s investment in the Hainan-Yuedong Block and the Group expects to significantly enhance the value of its oil assets portfolio upon full production.

Moving forward, the Group will seek to improve the productivity of its existing oil assets and implement cost efficiency measures to maximize the investment returns from its oil business.

The Group’s coal business is another strategically important investment of the Group and includes a 16.14% interest in Macarthur Coal Limited (which is listed on the Australian Securities Exchange), a 7% direct interest in the Coppabella and Moorvale coal mines joint venture (owned and operated principally by Macarthur Coal Limited) and various interests in other projects under development and exploration. The coal business made a significant profit contribution in 2010. Although Australia's coal export has been affected by flooding and adverse weather conditions in Queensland since late 2010, the average selling prices of both low volatile pulverized coal injection coal (“LV PCI coal”) and thermal coal have increased dramatically as a result of shortages in the market. The outlook for demand for LV PCI coal remains positive after taking into account the strong demand for its usage in global steel production. The Group’s coal business is expected to continue to be a major asset capable of delivering economic significance for the Group.

The import and export of commodities business of the Group recorded another year of strong growth in both revenue and profit. The Group continues to extend the scope of its export business in the PRC which remains an important market. It is expected that the robust economic growth of the PRC coupled with the established selling channels of the Group will sustain the operating momentum of the Group’s import and export of commodities business.

Following the rebound in aluminium prices and improvement in the global economy, the Group’s Portland aluminium smelting business performed better than in 2009. The signing of a new base load electricity contract in March 2010 with Loy Yang Power has helped secure a stable electricity supply for the project from 2016 through 2036. The Group expects the demand and prices for aluminium to improve steadily in the near term.

Manganese prices also benefited from a resurgence in the demand for manganese products as a result of increased demand for steel products generally during 2010. As a result, a satisfactory performance was recorded in 2010 by CDH which operated the Group’s manganese business prior to its spin-off and separate listing on the Stock Exchange. Following the spin-off and separate listing of CDH, the Group’s interest in CDH has diluted to 38.98% with CDH ceasing to be a subsidiary of the Group. The separate listing of CDH will allow the Group to focus its resources more effectively on its core businesses to deliver greater value to shareholders.

Although the global economy has stabilised following the financial crisis , there remain some uncertainties and cautiousness over a sustained full economic recovery. Accordingly, the Group will proactively monitor the risks affecting its operations and take appropriate actions if necessary.

Going forward, the Group wi l l continue to strive to produce long- term economic benefits for shareholders by seeking to enhance its businesses through organic growth, more efficient deployment of resources and exploring potential investment opportunities in the energy and resources sectors.

With effect from 1 September 2010, Mr. Sun Xinguo was appointed an executive vice chairman of the Company and Mr. Zeng Chen was appointed the president and chief executive officer of the Company. I wish to extend my congratulations to Mr. Sun and Mr. Zeng on their appointments.

In November 2010, Mr. Qiu Yiyong and Mr. Tian Yuchuan, executive directors of the Company, were re-designated as non-executive directors.

2010 has been a robust year for the Group. I thank my fellow directors, management and dedicated staff for their hard work and efforts in what was an extremely busy year for the Group. On behalf of the Board, I express our sincere gratitude to our shareholders, customers, suppliers, bankers and business associates for their continued support to the Group.