ONFEM Holdings has entered into a preliminary letter of intent with China National Nonferrous Metals Industry Corp (CNNC) for an aluminium smelting joint-venture in Guizhou. ONFEM and CNNC will take a substantial equity participation in the joint-venture to start aluminium smelting at the Guizhou Aluminium Factory in southwestern China. The capital to be invested by ONFEM was not expected to exceed $400 million, which would be finalised by part of its US$28 million convertible bond issue. ONFEM said the subscription agreement with Nomura International (Hong Kong) for the bond issue was completed yesterday. The group said the letter of intent with CNNC on the proposed joint-venture was not legally binding and negotiations were at a pre-contract stage. ONFEM also said it recently established an operation for trading in non-ferrous metals, which might lead to trading between the group and CNNC. The group's capital expenditure for the year ended March 31, 1993, amounted to $370.55 million. It said its capital expenditure for the year ending March 31, 1994, would reach $663.8 million, of which $649.2 million would be used to buy properties. About 75 per cent of the estimated expenditure for the year was expected to be financed by bank borrowings and 25 per cent by internal resources. As at January 31, ONFEM's financial investments in equity of subsidiaries amounted to $695.3 million and there were no long-term loans to the subsidiaries.