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View all search resultsCoal concession for religious groups could put mining standards at risk
The government's move to grant state-owned coal mine concessions to business entities owned by religious groups may discourage foreign investment in the domestic coal sector.
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Heavy machines operate on May 24, 2024, at a
coal mine in Sumber Batu village, Meureubo district,
Aceh. Indonesia produced 138 million tonnes of coal in
the first three months of 2024, around 24 percent less than
the 183 million tonnes it produced in the same period last
year. (Antara/Syifa Yulinnas)
H
anding coal concessions to business entities backed by religious groups could risk undermining mining standards already established by the industry, as concerns emerge over the capability of these organizations to uphold them.
President Joko “Jokowi” Widodo initiated the move on May 30 through a regulation stipulating that the issuance of special mining license areas (WIUPK) could be expedited for business entities owned by religious organizations “to improve people’s welfare.”
This license is strictly limited to coal deposits previously controlled by miners holding work contracts (PKP2B), implying the concession would not include minerals, which the government deems more difficult to extract.
The regulation requires religious organizations to have a controlling stake in a business entity in order to acquire the license, which cannot be transferred to other entities without the approval of the energy and mineral resources minister.
Ahmad Zuhdi Dwi Kusuma, an industry and regional analyst at state-owned lender Bank Mandiri told The Jakarta Post on Wednesday that he expected there would be problems related to their capability to manage things professionally, transparently and accountably.
“It is questionable that they would be able to do sustainable mining practice without sufficient capabilities,” Zuhdi said.
This could put a dent in the investment climate in Indonesia’s mining industry albeit only to a limited extent, he said.
