Constitutional Court Rules: Mining Permits for Mass Organisations Cannot Be Directly Appointed

The Constitutional Court (MK) has officially ruled that the granting of Mining Business Permits (IUP) to religious mass organisations (ormas) and MSMEs cannot be carried out through direct appointment. The decision aims to ensure that the mining permit process follows fair procedures. This follows a lawsuit against the phrase ‘granting of priority’ for mass organisations, universities, and cooperatives as stipulated in Article 51 (1) and Article 60 (1) of Law Number 2 of 2025 concerning the Fourth Amendment to Law Number 4 of 2009 on Mineral and Coal Mining against the 1945 Constitution of the Republic of Indonesia. Article 51 (1) of Law No. 2 of 2025 states: ‘Metal Mineral WIUP is granted to Business Entities, cooperatives, sole proprietorships, small and medium enterprises, or business entities owned by religious mass organisations by way of auction or by way of granting priority.’ Article 60 (1) of Law No. 2 of 2025 states: ‘Coal WIUP is granted to Business Entities, cooperatives, sole proprietorships, small and medium enterprises, or business entities owned by religious mass organisations by way of auction or by way of granting priority.’ The MK’s decision is contained in MK RI Decision Number 160/PUU-XXIII/2025 regarding the Application for Judicial Review of Law Number 2 of 2025 concerning the Fourth Amendment to Law Number 4 of 2009 on Mineral and Coal Mining against the 1945 Constitution of the Republic of Indonesia. The applicants in the lawsuit were Imam Rohmatulloh (private business actor), Abdullah (MSME business actor), Eko Prasetyo (lecturer), Abdullah Faqih (student), and Pendi (Chairman of the Pagar Nusa Student Forum throughout the Archipelago/ FMPSN). The applicants challenged the rules regarding the granting of Mining Business Permit Areas (WIUP) for metal minerals and coal in the Minerba Law. The phrase in question was ‘by way of auction’ or ‘by way of granting priority’ for various entities, such as business entities, cooperatives, MSMEs, and religious mass organisations. The lawsuit focused on Article 51 and Article 60 of the Minerba Law, which then also referred to other paragraphs, as well as Article 75. In essence, the mechanism for granting these permits was considered problematic in its regulation within the law. The applicants assessed that the rule triggered legal uncertainty and injustice because the utilisation of mineral and coal resources was not maximised for the people’s prosperity. This condition was considered a violation of the mandate of Article 28D paragraph (1) and Article 33 paragraph (3) of the 1945 Constitution, which requires natural wealth to be managed for the benefit of the wider community. In the MK ruling received by CNBC Indonesia, the court stated that the phrase ‘granting of priority’ in the Mineral and Coal Mining Law cannot be interpreted as a right to obtain a permit automatically without strict procedures. The MK emphasised that the granting of priority must be based on clear parameters through an objective, transparent, and accountable assessment process. This is intended so that the priority mechanism is not misunderstood as an act of direct appointment that ignores the applicable selection standards. The MK’s ruling partially granted the applicants’ petition and declared the phrase ‘by way of granting priority’ in Article 51 paragraph (1) and Article 60 paragraph (1), as well as the phrase ‘by way of priority’ in several other paragraphs, conditionally unconstitutional. The phrases have no binding legal force unless interpreted as ‘by way of granting priority which can only be given with clear parameters through an objective, transparent, and accountable assessment process so that the granting of priority is not understood as an act of direct appointment’.