Constitutional Court sets transparent criteria for priority mining permits to religious organizations

What the Constitutional Court decided

On 16 July 2026, Indonesia's Constitutional Court announced its ruling on Case No. 160/PUU-XXIII/2025, a judicial review of the Fourth Amendment to the Mineral and Coal Mining Law (Law No. 2 of 2025). Nine constitutional judges, led by Chief Justice Suhartoyo, examined a petition brought by five citizens, including a small business owner, a lecturer, a student, and the chairman of a student forum affiliated with Nahdlatul Ulama.

The petitioners challenged the law's provisions on priority mining permits, specifically Articles 51, 51A, 60, 60A, 75, and 75A, which allow the government to grant special mining business permits (WIUPK) to religious and community organizations, cooperatives, and small businesses on a priority basis. Their concern was that "priority" had, in practice, functioned as a shortcut for direct appointment, bypassing the competitive and transparent processes that ordinarily govern how a public natural resource is allocated.

The Court agreed with the substance of that concern, though not with abolishing the priority mechanism itself. It ruled that priority allocation cannot be read as an automatic entitlement. Any organization seeking a permit under the priority scheme must still be evaluated through what the ruling describes as clear, objective, transparent, and accountable parameters. In effect, the government keeps the policy tool but loses the option of simply designating a recipient without a documented, testable process behind the decision.

The program behind the ruling

The case exists because of a policy Indonesia adopted in 2024, when Government Regulation No. 25 of 2024 opened the door for religious mass organizations to manage coal concessions returning to the state after the expiry of first-generation Coal Contracts of Work, known by the Indonesian acronym PKP2B. Six such concessions, previously held by PT Adaro Energy, PT Arutmin Indonesia, PT Kaltim Prima Coal, PT Kideco Jaya Agung, PT Multi Harapan Utama, and PT Kendilo Coal Indonesia, were identified for reassignment, covering a combined 96,854 hectares.

Nahdlatul Ulama, through its executive board PBNU, was the first to receive an operating permit, taking on a concession of roughly 26,000 hectares carved from the former Kaltim Prima Coal area in East Kalimantan. Muhammadiyah has since formed its own mining business entity, PT Mentari Swadaya Ecomining, to take up a separate former PKP2B site, while other faith communities, including Catholic and Protestant church bodies, were named as intended recipients of the remaining concessions. As of this ruling, Muhammadiyah's board member Muhadjir Effendy confirmed that his organization has not yet actually received its permit, underscoring how uneven and, until now, how procedurally loose the rollout has been.

How officials and organizations are responding

The government's response has been notably calm, and organizations affected by the ruling have chosen to describe it as a course correction rather than a setback. Energy and Mineral Resources Minister Bahlil Lahadalia was explicit that the ruling does not cancel the priority policy itself.

"Dia tidak membatalkan prioritas tapi harus lebih baik tata kelolanya agar asas transparansi, akuntabilitas itu betul-betul dapat kita lakukan," Bahlil said, meaning the decision does not cancel the priority mechanism but requires better governance so that the principles of transparency and accountability can genuinely be carried out.

Bahlil confirmed the ministry will draft implementing regulations, in the form of a ministerial regulation or ministerial decision, to define exactly what an objective and accountable selection process looks like in practice. He also clarified that the ruling has no retroactive effect, so Nahdlatul Ulama's existing operation on the former KPC concession continues without interruption.

The Indonesian Ulema Council (MUI) welcomed the ruling in similar terms, framing it as an opportunity rather than a constraint. The council's statement argued that religious organizations receiving these concessions should now judge their own readiness by governance standards rather than by the fact of priority status alone.

"MUI menegaskan bahwa ormas keagamaan harus menggeser fokus dari sekadar hak prioritas konsesi menjadi pemenuhan standar tata kelola yang profesional," the council said, calling on religious organizations to shift their focus from the priority right itself toward meeting professional governance standards.

Muhammadiyah's Muhadjir Effendy struck a similarly measured note, saying the organization will comply with whatever process the government designs and is simply waiting for the implementing rules to be published.

The numbers behind the reallocation

The scale of the underlying program is worth setting out plainly, since it is easy to lose amid the legal language. The 96,854 hectares involved are not marginal exploration blocks; they are producing or recently producing coal concessions with established infrastructure, workforces, and, in most cases, unresolved post-mining land obligations inherited from their previous operators. Six former PKP2B holders are involved, and at least two organizations, NU and Muhammadiyah, have moved from allocation to active or near-active operation.

Reporting on the individual concessions varies in precision, and Sirkularium notes that discrepancy here rather than resolving it by assumption. Some accounts describe NU's KPC-derived concession as being in the range of 25,000 to 26,000 hectares, while separate reporting on PT Kaltim Prima Coal's own operating area references a reduction from 84,938 hectares to 61,543 hectares following a 2022 permit extension, a different figure describing the parent concession rather than the portion transferred to NU. Precise, audited figures for each of the six sites, and for the environmental and reclamation liabilities attached to them, are not yet uniformly public.

Why this matters for resource governance

For an audience of government and public institutions, the significance of this ruling sits less in its effect on any single organization and more in what it says about how Indonesia intends to govern the allocation of public mineral resources going forward. A priority mechanism, used well, can be a legitimate policy instrument for channeling economic benefit from state-owned resources toward community institutions. Used loosely, it risks becoming indistinguishable from an uncompetitive handout, with all the accountability questions that invites.

The Court's insistence on objective, transparent, and accountable parameters gives the Ministry of Energy and Mineral Resources a clear brief for the implementing regulation it must now write. That regulation is an opportunity to specify not just who qualifies organizationally, but how the value of each concession, and the environmental and reclamation obligations that come with it, will be assessed and disclosed before a permit changes hands.

Sirkularium's view

Sirkularium reads this ruling as a positive development for the credibility of Indonesia's resource governance, and as a natural opening for the kind of independent economic valuation work the country's mining sector increasingly needs. When priority permits move from direct appointment to documented, testable criteria, one of the most defensible criteria a ministry can adopt is a standardized, independently verified valuation of the concession itself, covering not only recoverable reserves but also the reclamation guarantee obligations, environmental economic loss exposure under the Permen LH No. 7 Tahun 2014 framework, and the ecosystem condition of the land being transferred.

Building that kind of valuation into the forthcoming ministerial regulation would do two things at once. It would give the government an objective, auditable basis for comparing candidate organizations, exactly what the Constitutional Court has now required. And it would give the religious and community organizations receiving these concessions a clear, defensible record of the environmental and financial condition they are taking on, useful both for their own governance and for demonstrating compliance to the Ministry of Environment and Forestry. For institutions weighing how to implement this ruling, commissioning that kind of valuation now, as standard practice rather than as a response to controversy, is the more solid foundation to build on.