Constitutional Court Rules Mining Permits for Religious Groups Cannot Be Direct Appointments, Bahlil Responds

Jakarta, CNBC Indonesia – Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia has spoken out regarding the Constitutional Court’s (MK) ruling that the granting of Mining Business Licences (IUP) to cooperatives, small and medium enterprises (SMEs) and religious mass organisations (Ormas) cannot be carried out through direct appointment.

Bahlil assured that the MK ruling does not remove the phrase “priority allocation”. Rather, the Court only requests that the granting of licences be carried out through a more transparent and accountable mechanism.

“The MK ruling states that the priority allocation still exists. Appointment cannot be done arbitrarily; there must be a mechanism, there must be rules,” Bahlil said at the State Palace, quoted on Tuesday (21/7/2026).

Therefore, his ministry will promptly issue implementing regulations as a follow-up to the MK ruling regarding the granting of Mining Business Licences (IUP) to cooperatives and religious mass organisations.

“So the priority remains. The Court did not cancel the priority, but governance must be improved so that the principles of transparency and accountability can genuinely be upheld. And I think what the MK has decided is something good, because we want transparency in everything,” Bahlil said.

As is widely known, the Constitutional Court has officially ruled that the granting of Mining Business Licences (IUP) to religious mass organisations and SMEs must not be carried out through direct appointment. The decision aims to ensure that the mining licence granting process follows fair procedures.

This follows a legal challenge against the phrase “priority allocation” for mass organisations, universities and cooperatives contained in Article 51 (1) and Article 60 (1) of Law Number 2 of 2025 on the Fourth Amendment to Law Number 4 of 2009 on Mineral and Coal Mining, measured against the 1945 Constitution of the Republic of Indonesia.

Article 51 (1) of Law No. 2 of 2025 reads:

“Metal mineral Mining Business Areas shall be granted to Business Entities, cooperatives, individual companies, small and medium enterprises, or business entities owned by religious mass organisations by way of auction or by way of priority allocation.”

Article 60 (1) of Law No. 2 of 2025 reads:

“Coal Mining Business Areas shall be granted to Business Entities, cooperatives, individual companies, small and medium enterprises, or business entities owned by religious mass organisations by way of auction or by way of priority allocation.”

The MK ruling is contained in Constitutional Court Decision Number 160/PUU-XXIII/2025 concerning the Petition for Judicial Review of Law Number 2 of 2025 on the Fourth Amendment to Law Number 4 of 2009 on Mineral and Coal Mining against the 1945 Constitution of the Republic of Indonesia.

The petitioners in the case were Imam Rohmatulloh (a private business owner), Abdullah (an SME business owner), Eko Prasetyo (a lecturer), Abdullah Faqih (a student), and Pendi (Chairman of the Pagar Nusa Student Forum across the Archipelago/FMPSN).

The petitioners challenged the provisions governing the granting of Mining Business Areas (WIUP) for metal minerals and coal under the Mineral and Coal Mining Law. The phrases contested were “by way of auction” or “by way of priority allocation” for various entities, such as business entities, cooperatives, SMEs and religious mass organisations.

The lawsuit focused on Articles 51 and 60 of the Mining Law, which also referred to other paragraphs as well as Article 75. In essence, the licence-granting mechanism was deemed problematic in its regulation within the law.

The petitioners argued that the provision created legal uncertainty and injustice, as the utilisation of mineral and coal resources did not maximally benefit the people’s prosperity. This was considered a violation of the mandates of Article 28D paragraph (1) and Article 33 paragraph (3) of the 1945 Constitution, which require natural wealth to be managed for the benefit of the wider public.

In the MK ruling received by CNBC Indonesia, quoted on Friday (17/7/2026), the Court stated in its verdict that the phrase “priority allocation” in the Mineral and Coal Mining Law cannot be interpreted as an automatic right to obtain a licence without strict procedures.

The MK emphasised that such priority allocation must be based on clear parameters through an objective, transparent and accountable assessment process. This is intended to ensure that the priority mechanism is not misunderstood as an act of direct appointment that ignores the selection standards that should properly apply.