China Railway cuts stake, funding in Congo project

SHANGHAI, July 4 (Reuters) - China Railway Group (0390.HK) (601390.SS) said on Friday it will cut its capital commitment to a Congo mining project to $2.64 billion from $4.04 billion and lower its stake as a state-owned resource firm joins the venture.

State-owned China Metallurgical Group Corp, a resources development company, will take a 20 percent stake in the project and offer financing, China Railway, the country's largest railway and highways builder, said in a statement.

China Railway will lower its stake in the project to 28 percent from 43 percent and its partner Sinohydro Corp will reduce its holding to 25 percent from 20 percent, to make room for China Metallurgical's investment.

China Railway announced plans in April to set up the joint venture to invest in a copper and cobalt mining project in the Democratic Republic of Congo. (For details click [ID:nSHA275130])

China Railway said China Metallurgical's expertise in resource development would contribute to the smooth progress of the project.

One of the Congo partners in the project, Gilbert Kalamba Banika, transferred his 12 percent stake to Congo Simco, a real estate management and land development firm, China Railway said. The amended terms of the joint venture agreement will lower China Railway's share of responsibility for unsecured shareholders' loans and assistance in arranging financing to slightly less than $1.20 billion of the Chinese consortium's $2.90 billion total. Sinohydro and China Metallurgical will be responsible for $852.5 million each. (Reporting by Edmund Klamann; editing by Jonathan Hopfner)