Tuesday, July 16, 2024 | 03:51 WIB

Mining Concessions Awarded to Societal Organizations Religious Groups as primary recipients need to carefully evaluate the benefits and drawbacks

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Jakarta, IO – Government Regulation (PP) 25/2024, has been signed and took effect on May 30, 2024. It amended PP 96/2021, concerning the implementation of coal and Mineral mining business activities, effectively throwing the door open to religious groups/ organizations to manage state-owned mining areas. 

The issuance of PP 25/2024 is a manifestation of President Joko “Jokowi” Widodo’s commitment conveyed at the 34th Muktamar (Congress) of Nahdlatul Ulama (NU) – Indonesia’s largest Muslim organization – on December 22, 2021 in Lampung. In his opening remarks, President Jokowi said: “I also wish to offer coal and mineral mining concessions for those who want to be engaged in extracting nickel, coal, bauxite, copper, you are all welcome to do it. But once again, this should be done in a large business group, so it can also haul other ‘carriages’ to also benefit from it. This requires a lot of work, but I see that Nahdlatul Ulama has the potential; it just needs to be built.” 

The decision undoubtedly sparked animated public debate. The amendment is deemed to have violated Law 3/2020 (Coal and Mineral Mining Law), especially with regard to the auction mechanism which gives religious groups/organizations preferred bidding rights; this now signifies that they will be prioritized. Many are suspicious that the policy is the Government’s “gambit” to reward the Nahdlatul Ulama Executive Board’s (PBNU) for its tacit support in the 2024 presidential election which has just concluded. This has put Investment Minister Bahlil Lahadalia in an awkward position, as he becomes the point man tasked with explaining the controversial decision to the public. 

Bahlil insists that the granting of Special Mining Business License Area (WIUPK) – which serves as the basis for the issuance of Special Mining Permit (IUPK) – to religious groups is not a form of “transactional politics”. In the Government’s view, this policy stems from the desire to acknowledge the profound contribution and service of religious organizations in the journey of the Republic of Indonesia, and to ensure the that the country’s vast natural resources are managed in a socially-just manner.

Admittedly, religious organizations in Indonesia played a critical role in eras long before the country gained its independence. Their works and influence are manifest in many aspects, especially education, social, cultural and political. In the course of Indonesia’s history, religious organizations, as part of civil society, have strengthened and enriched the national fabric. President Jokowi’s decision to grant them the right to manage mining concessions can be interpreted as his appreciation toward their precious role and contribution, especially that of NU, in Indonesia’s long and arduous journey to statehood. With this policy, it is hoped that religious organizations can benefit from a new source of income to fund their activities. 

By taking into account a raft of issues that may arise in mine management, the Government did nothing wrong in giving coal mining concessions to religious groups, even though President Jokowi also promised concessions for metal and minerals at NU Congress. However, exploration, extraction and refining of minerals and metal is much more complex than coal. Moreover, the Contract of Work WIUPK is relatively limited in scope, compared to the WIUPK relinquished from first-generation mining contracts (PKP2B). 

It has to be noted that PP 25/2024 does not grant access exclusively to NU, but to all organizations affiliated to the six official religions recognized by the state — Islam, Protestanism, Catholicism, Hinduism, Buddhism and Confucianism. If the opportunity is not taken up by religious organizations other than NU, then that is their own internal matter, the point being that there was no preferential treatment or favoritism toward any particular religious group, let alone to suggest that it was political quid pro quo. 

The work does not end with getting the WIUPK, but to make sure that the exploration permit can reach an operational production stage. Of course, the most important thing is how mining operations and coal production can provide optimal benefits for religious organizations, including a multiplier effect for communities living in the vicinity of the mine. Negative public perceptions toward the policy must be rebutted by the concessionaires operating according to so-called “good mining practices”. 

The rights over natural resources 

Bahlil’s from stance is in fact an appropriate one. Religious organizations that obtain WIUPK from priority bidding must not create conflicts of interest and must be managed professionally. In fact, the Government will continue to assist them by finding them the right work partners to manage the mines. Bahlil’s response was directed toward the skepticism about their ability to manage a mine. 

Religious organizations – and NU in particular – must adhere to good mining practices, starting from exploration, land clearing or topsoil removal, overburden/drilling and blasting, overburden removal, coal extraction, coal crushing, hauling, and even rehabilitation/reclamation of mining sites. All activities along this production chain must be carried out professionally. Even mining closure, including building economic sustainability, must be prepared well in advance by the concessionaires. 

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