Indonesia’s Faith-Based Mining Push Sparks Rifts Inside NU and Beyond

When Indonesia’s government opened the door for religious mass organizations to manage coal mines, officials framed the move as a bold step toward a more equitable economy. But behind the rhetoric, the policy has triggered deep unease—especially inside Nahdlatul Ulama (NU), the country’s largest Muslim organization, where debate over whether to embrace coal concessions has spiraled into a broader struggle over ethics, environmental risk and political proximity to power.

A Controversial Regulation, and a Powerful Minister

The controversy began with Government Regulation (PP) No. 25/2024, signed by President Joko Widodo in late May 2024. The rule amends earlier mining legislation to allow special mining business permit areas (WIUPK) to be offered on a priority basis to business entities owned by religious organizations. The permits are limited to coal deposits previously controlled under large-scale coal contracts, positioning religious groups as new players in one of Indonesia’s most politically sensitive sectors.

Within weeks, the political weight of the scheme became clear. A subsequent Presidential Regulation No. 76/2024 transferred the authority to designate and award these special mining areas from the Energy and Mineral Resources Ministry to the Investment Ministry, led by Bahlil Lahadalia. The shift effectively concentrated decision-making power over faith-based coal concessions in the hands of a single, politically influential minister, reinforcing perceptions that mining licenses could be used as instruments of patronage.

NU at the Center of the Storm

Nahdlatul Ulama, which claims more than 90 million followers and is widely regarded as the world’s largest independent Muslim organization, quickly emerged as the primary beneficiary of the new policy. Officials at the Investment Coordinating Board confirmed in June 2024 that NU was the only religious group to have formally applied for a mining business license (IUP) under the scheme.

By August 2024, NU’s central board had gone further still, securing a special coal mining permit for a 26,000-hectare concession in East Kalimantan once managed by Kaltim Prima Coal. NU chairman Yahya Cholil Staquf publicly thanked President Widodo and framed the project as a way to channel resource wealth directly to ordinary Indonesians.

Internal Dissent: Ethics, Environment and Power

Yet NU’s embrace of coal mining has exposed sharp internal divides. Grassroots members, senior alumni and affiliated scholars have questioned whether a religious body can ethically run a high-risk, heavily polluting business without compromising its moral authority.

In June 2024, a group of NU alumni from Universitas Gadjah Mada (UGM) issued a public statement rejecting mining concessions for religious organizations and urging the government to cancel the policy altogether. Their stance reflected concerns long voiced by environmental advocates who warn that coal extraction has already contributed to severe deforestation, land subsidence and flooding in Indonesia’s main coal-producing regions.

The fissures are not confined to NU. In Muhammadiyah, the country’s second-largest Muslim group, senior figures have openly opposed the policy. Former chairman Din Syamsudin argued that mining concessions for Islamic organizations would bring “more harm than benefits,” especially for the environment, and urged Muhammadiyah to decline offers from the Investment Ministry and the president. The organization’s environmental arm, known as the Green Cadre, has warned that accepting such permits could undermine decades of work in ecological education and advocacy.

Government Narrative: Equity and Welfare

For the administration, however, religious control of coal resources is a political and economic experiment in redistribution. President Widodo has repeatedly defended the decision, saying the goal is to promote “economic justice” by ensuring mines are not monopolized by major corporations. Investment Minister Bahlil Lahadalia has insisted that religious organizations can learn to manage mines as effectively as private firms, arguing that many existing operators also began without prior experience in the sector.

Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan has framed the policy as a way to help religious organizations fund social services, from schools to places of worship. At the same time, he has acknowledged that special mining permits for faith-based groups are vulnerable to conflicts of interest and must be tightly monitored by the public. This call for oversight, critics argue, underlines the regulatory and governance risks built into the scheme from the start.

High Stakes for Governance and the Climate

Indonesia is the world’s largest thermal coal exporter and among the top five coal producers globally. Coal still supplies more than half of the country’s electricity, even as Jakarta has pledged under the Paris Agreement to reach net-zero emissions by 2060 or earlier. Allowing new coal concessions for religious organizations, analysts warn, could lock in fresh investments in a sector that global climate models say must rapidly shrink.

Environmental economists and banking analysts have also raised questions about capacity and oversight. One industry analyst told The Jakarta Post that many religious bodies lack the technical, financial and governance systems required for safe and sustainable mining, posing risks to both environmental standards and local communities. Indonesia already faces thousands of abandoned mine pits, many left unreclaimed and posing hazards to nearby residents, including children.

Internal Conflicts, National Implications

Inside NU, the mining issue has become a proxy for larger debates: about the organization’s relationship with the state, the line between religious mission and business, and the role of its leadership in high-stakes political bargaining. Publicly, NU’s central board has emphasized professionalism, promising that mining operations will be run through dedicated business arms under strict environmental and governance standards. Privately, members worry that the legitimacy of one of Indonesia’s most trusted moral authorities could be tarnished by coal dust and corruption risk.

The internal frictions mirror a broader national dilemma. As Indonesia seeks new ways to share the gains of its vast natural resources, it is testing whether religious mass organizations—pillars of social and spiritual life—can also function as powerful corporate actors. The outcome of NU’s coal venture, and the political battles surrounding it, will help determine whether this experiment is remembered as a pathway to fairer prosperity or as a case study in how not to mix faith, politics and fossil fuels.