TAIYUAN, Oct. 23 -- North China's coal-rich Shanxi Province plans to restore the environment in its mined-out areas in the next five years, local authorities said on Thursday.

Based on a draft plan, the local government will invest more than 26 billion yuan (about 4.2 billion U.S. dollars) to fill in and restore vegetation to the subsidence areas caused by private coal mining, according to the provincial development and reform commission.

The money will also be used to relocate nearly 650,000 residents in 1,352 villages in subsidence areas and strengthen the dilapidated houses of another 1.1 million people, the commission said.

As one of the nation's leading coal producers, Shanxi has produced a total of 14.5 billion tonnes of raw coal since the founding of the People's Republic of China in 1949.

Heavy coal mining benefits Shanxi's economy, but at a high price. Statistics showed that three-fifths of the 5,000 square km of mined-out areas in the province have subsided and affected 2.3 million people.

"Some mining activities have damaged people's houses, farmland and polluted their drinking water. The situation can be changed through careful mine planning, preventive measures and post-mining repairs," an official from the commission said.

The local government has taken measures to deal with the problem. It carried out a first round of restoration work in state-owned coal mining districts from 2004 to 2010. More than 180,000 affected families were relocated.