(Yicai) June 4 -- Sichuan has become China’s first provincial-level region to set up a system that links flexible revenue sharing from the granting of mining rights with the amount of money invested in exploration, doing away with fixed revenue-sharing ratios in a bid to encourage local governments to invest more in mineral exploration.

From next month, the provincial, municipal, and county-level governments will share 60 percent of the income generated from granting mining and exploration rights based on their investments in the related projects, according to a document released by Sichuan’s finance department yesterday. The central government will continue to receive 40 percent. 

The flexible mechanism aims to spur investment by lower-level local governments, the finance department added. Following the change, 11 municipalities and counties in Sichuan committed CNY160 million (USD22 million) to 28 exploration projects for this year and next.

Located in southwestern China, Sichuan is rich in natural gas and shale gas and has large reserves of vanadium, titanium, and lithium ores.

Under the new system, if the provincial government is the sole investor in a mining or exploration project, it will get 35 percent of the income from the rights sale. The municipal and county governments will split the remaining 25 percent. 

If the provincial government and the municipal and county governments equally invest in a project, each of the latter two parties will receive 30 percent of the revenue from the rights sale.

If the municipal and county governments are the sole investors in a project, they will share 35 percent of the income. The provincial government will get the other 25 percent. 

Under the old system, the provincial government took 32.25 percent of the income, municipal governments 5.55 percent, and county governments 22.20 percent, regardless of how much money they invested in a project.

Editor: Futura Costaglione