* Approval came in on Monday-Hanlong
* Hanlong official says seeking lower price
* OK caps tumultuous one year for the deal
* Focus now on securing funding from China Development Bank (Adds Hanlong official saying seeking lower price)
By Wan Xu and Jason Subler
BEIJING, Aug 1 (Reuters) - Hanlong Mining said China has approved its long-delayed $1.3 billion takeover bid for Australian iron ore developer Sundance Resources, a vote of confidence for a sector grappling with falling prices and weak demand as the global economy cools.
Hanlong, which already owns 17 percent of Sundance, wants the company for its $4.7 billion Mbalam iron ore project on the border of the republics of Congo and Cameroon in western Africa. The region is seen as a major new source of iron ore that could cut China's dependence on Australia and Brazil.
"We have gotten approval from the National Development and Reform Commission. It was approved on Monday," a media officer from Hanlong told Reuters on Wednesday.
With the approval from the top economic planner, Hanlong now needs finance from China Development Bank to complete the deal that was agreed a year ago, when the iron ore price outlook was far more positive.
The deal's lengthy delays had pointed to China's reluctance to make big bets on risky resources projects offshore amid uncertainty over economic growth at home.
Iron ore prices are languishing near their lowest level in more than two and a half years, hitting the share prices of resource firms.
Hanlong is now seeking to negotiate a lower price for its bid for Sundance, a separate Hanlong official said, now that its share price has fallen over 40 percent from the agreed prices of A$0.57 ($0.60) per share which valued the company at A$1.74 billion.
Sundance shares last traded at A$0.335 cents, before the stock was placed on a trading halt on Tuesday.
The Hanlong official declined to be named because he was not authorised to speak to the media.
Under the agreement, Hanlong must secure China Development Bank's blessings by Aug 31 to buy the shares it does not already own.
Media reports in Australia on Wednesday said Hanlong had reduced the deal to 50 cents a share and Sundance board was expected to recommend the new offer. It was not immediately clear whether the offer had been cut. A Sundance spokeswoman declined to comment.
Australia's Foreign Investment Review Board approved Hanlong's bid for Sundance in June.
The decision caps a tumultuous two years for Sundance. In June 2010, the entire board of directors was killed in a plane crash near the Mbalam project. A new board and management were appointed before the Hanlong bid in July last year. On Tuesday, a Hanlong executive, Calvin Zhu, pleaded guilty to insider trading regarding the bid.
Chinese interest in snapping up Australian assets has dropped sharply since last year, when Chinese takeovers of Australian metals and mining assets peaked at 40 deals worth $6.5 billion, according to Thomson Reuters data.
So far this year, bids have shrunk to $522 million, with bankers and lawyers saying Chinese companies are not eager participants in mine auctions any more.
The Mbalam project, which includes building a 510 km (320 mile) rail line and a deep water port, is expected to produce 35 million tonnes a year of iron ore.
This compares with a forecast 55 million tonnes this year from Australia's Fortescue Metals Group, the world's number four iron producer. (Additional reporting by Su Dan in Beijing and Narayanan Somasundaram in SYDNEY; Editing by Muralikumar Anantharaman)