The move, recently approved by the central government, aims to end the country's decades-old practice of a "free lunch" for the "black gold energy" developers, who acquired mining rights via administrative examination without paying any or only nominal fees.

The government has authorized to carry out the pilot reform in the provinces of Shanxi, Henan, Shandong, Shaanxi, Anhui, Guizhou, Heilongjiang, and Inner Mongolia Autonomous Region,according to the National Development and Reform Commission (NDRC), a macroeconomic management agency under the State Council.

All mining and prospecting rights newly available in those areas must be obtained through tenders or auctions, said the NDRC.

Enterprises that have already acquired prospecting and mining rights for free will have to pay after their remaining coal reserves are assessed.

Twenty percent of the collected fees will go to the central government, to help fund national geological prospecting.

Meanwhile, local governments will receive 80 percent of the revenues that are to be used in local geological prospecting and to improve the operation of state-owned mines.

The revenues from selling mining rights are expected to reach 260 billion yuan (32.5 billion U.S. dollars) in Shanxi Province, which pioneered the reform in February by demanding a royalty of 1.3 to 3.8 yuan per ton of coal for mining rights.

Guizhou Province in northwest China also set up a bureau to administer mining rights.

The reform will force enterprises to shoulder the cost of exploiting coal resources and lift the threshold for investing in coal mines, said an official with the NDRC's Bureau of Energy.

China will also establish a responsibility system forcoal mines, requiring new mines to set aside part of their revenues for environmental protection, according to NDRC.

Coal consumption in China, the world's No. 1 coal producer and consumer, accounts for about 70 percent of the nation's total unrenewable energy consumption.

Coal has also played a key role in fueling the country's rapidly expanding economy, which has grown by more than 9 percent in recent years.

Last year, China's coal output came to 2.19 billion tons and the figure is expected to climb to 2.45 billion tons this year.