Indonesia opens mining to cooperatives, leaving reclamation guarantees an open question

A cooperative can now hold what a mid-sized company holds

On National Cooperatives Day, July 13, 2026, Cooperatives Minister Ferry Juliantono told the assembled crowd that Indonesian cooperatives can, for the first time, manage strategic natural resource sectors once reserved for state enterprises and large private companies. Mineral and coal mining sits at the centre of that expansion. Community oil wells and crude palm oil processing were folded into the same announcement, alongside President Prabowo Subianto, who used the event to describe a vision of cooperatives running warehouses, cold storage, delivery fleets, and retail outlets across rural Indonesia.

The mining piece is not new in principle. Government Regulation 39 of 2025, the second amendment to Government Regulation 96 of 2021 on mineral and coal mining, was published in October 2025 and already lets cooperatives and small and medium enterprises apply for a Mining Business Permit Area, known as a WIUP, up to 2,500 hectares. What July 13 added was scale and momentum: a government reaffirming, a year on, that this is the direction of travel, and pairing it with a fresh example, a Musi Banyuasin cooperative CPO mill with a processing capacity of 60 tonnes an hour, due to open in August. The Ministry of Cooperatives says 15,845 village and sub-district cooperatives have already been built nationwide.

Verification of a cooperative applicant's administrative standing and membership runs through the Ministry of Cooperatives and SMEs, not the Ministry of Energy and Mineral Resources, before an approval is issued through the Online Single Submission system. That routing matters. It means the gatekeeper checking whether an applicant is a real, well-formed cooperative is not the same body that has spent years building the technical apparatus, AMDAL review, RKAB approval, reclamation guarantee tracking, that governs how a mine is actually run once the permit is granted.

The reclamation question nobody answered on stage

None of the official statements from July 13, in the Jakarta Post's report, ANTARA's, VOI's, or the Cooperator News' coverage of the underlying regulation, mention environmental oversight, AMDAL requirements, or reclamation guarantee funds. The emphasis throughout is opportunity: cooperatives competing with large corporations, communities capturing more of the value from resources extracted in their own regencies, a strategic sector opened to smaller players for the first time.

Nailul Huda, director of the Digital Economy Center of Economic and Law Studies (Celios), was more specific about what is missing. He warned that cooperatives taking on mining permits must manage the same social and environmental impacts that remain "a major challenge even for large companies," while also facing financing constraints large miners do not, and the risk that bigger corporations use cooperative structures as a front to expand their own footprint without triggering ownership limits meant to apply to them directly.

PWYP Indonesia, a coalition that tracks extractive industry governance, went further, questioning whether the regulation quietly favours specific, well-connected entities over the broad base of small cooperatives it claims to serve.

"It will be risky if mining permits are granted to more players, such as cooperatives," one expert cited by PWYP Indonesia said, pointing specifically to environmental rehabilitation as a cost category smaller entities are structurally less able to absorb.

Post-mining land restoration is expensive by design. It requires topsoil replacement, revegetation, water quality monitoring over years, and, where a concession touches forest or watershed, the kind of ecosystem services accounting that Indonesia's own environmental economic loss methodology under Ministerial Regulation of Environment 7/2014 was built to price. A 2,500-hectare concession, run without the balance sheet of a listed miner behind it, is a meaningful test of whether that machinery still functions when the operator is a village-level cooperative rather than a company with a compliance department.

Gunung Kuda: what happens when capacity does not match ambition

Indonesia has one recent, concrete precedent for what happens when a smaller, less capitalised operator runs an extractive site without matching technical and safety standards. In May 2025, a limestone quarry at Gunung Kuda in Cirebon regency, West Java, operated by an Islamic boarding school-linked entity, collapsed. The Jakarta Post reported at least 13 people dead in its initial coverage; other accounts put the toll higher as search efforts continued, and PWYP Indonesia's own account of the incident cites a still higher figure. Sirkularium is not able to reconcile the exact death toll across these accounts and notes the discrepancy rather than choosing one number. What is consistent across every report is the cause: investigators pointed to improper mining technique, and West Java's governor revoked the site's operating permit once the scale of the failure was clear.

Gunung Kuda was not a cooperative mining a WIUP under PP 39/2025. But it is the closest real-world illustration Indonesia has of the exact risk PWYP and Celios are describing now: a smaller, community-linked operator running an extractive site, under real production pressure, without the technical bench strength that large miners have built up over decades of AMDAL cycles and RKAB reporting. The new mining cooperatives will operate under a different legal structure and, in principle, under active government support rather than informal tolerance. Whether that support extends to genuine technical and financial capacity, not just permit access, is the open question this expansion has not yet answered.

The compliance clock is already running for everyone else

While cooperatives are being welcomed into mining, the compliance bar for every existing permit holder is rising, not falling. A February 7, 2026 letter from the Directorate General of Minerals and Coal, referenced T-1415/MB.07/DBT.PL/2026, instructed every holder of a Contract of Work, a Coal Contract of Work, a standard Mining Business Permit, or a Special Mining Business Permit to submit physical proof of their reclamation and post-mining guarantee funds, alongside environmental permits, AMDAL documents, and reclamation plans. Companies that do not comply will not receive approval for their 2026 to 2030 Reclamation Plan, a direct block on continued operation.

That letter did not name cooperatives, because in February the cooperative provision was still mostly theoretical. It will not stay theoretical for long. Every cooperative that receives a WIUP under PP 39/2025 will eventually face the same reclamation guarantee cycle that large miners are being pressed to document proof of right now. Whether the Ministry of Cooperatives' administrative verification process, built to confirm that an entity is legally and organisationally a cooperative, is equipped to also confirm that entity can fund a multi-year land restoration programme is a separate and unresolved question.

Sirkularium's view

The policy logic behind opening mining to cooperatives is coherent: Indonesia's extractive wealth has long concentrated around a small number of large operators, and channelling more of that value toward the communities living on top of the resource is a legitimate objective. The gap is not in the ambition. It is in the absence, so far, of any published mechanism for verifying, before a WIUP is granted, that a 2,500-hectare concession comes with a credible plan for the land it will leave behind.

Indonesia does not need to invent this mechanism. It already has one, tested at scale in cases like PT Timah's, where a standard environmental economic loss methodology under Permen LH 7/2014 put a rupiah figure on ecological damage, economic loss, and recovery cost using GIS baseline mapping and ecosystem services data. The same methodology, applied prospectively rather than after a disaster, is exactly the tool that could tell a licensing authority, a cooperative's own members, or a financing partner whether a proposed concession's reclamation guarantee is realistic before the first excavator moves. For government agencies weighing how fast to scale cooperative mining, and for the cooperatives themselves seeking financing partners who will ask hard questions about environmental liability, commissioning that kind of independently verified valuation now, as ordinary due diligence rather than crisis response, is the more defensible path than waiting for a Gunung Kuda-scale event to force the question.