Constitutional Review of Priority Mining Permit Awards: MK 160/PUU-XXIII/2025

The Constitutional Court decided case 160/PUU-XXIII/2025 on 16 July 2026 in a review of Law 2/2025, the fourth amendment to Law 4/2009 on Mineral and Coal Mining. Five petitioners — Abdullah Faqih, Pendi, Abdullah, Iqro` Katsir and Alif Alvian Mawaddi Hamid — challenged the provisions that allow mining business permit areas to be handed out by way of priority instead of through an auction. The wording appears in Pasal 51(1) and Pasal 51(3) to (6) for metallic mineral permit areas, in Pasal 60(1) and Pasal 60(3) to (6) for coal permit areas, and in Pasal 75(3), which gives certain holders priority in obtaining a special mining business permit. The Court measured the wording against Article 33(3) of the 1945 Constitution.

Legal Reasoning

The Court started from its earlier position on Pasal 6(1)(j) of the Mineral and Coal Mining Law, which uses the phrase "on a priority basis". It read that phrase as an affirmative instrument designed to serve national strategic objectives in the management of mineral and coal resources. The preference is not confined to enterprises owned by the state or by regional governments; it also reaches private entities that meet the requirements, in part as a way of mitigating problems such as illegal and unlicensed mining. On that reading the Court held that the phrase in Pasal 6(1)(j) does not conflict with Article 33(3), and that the petitioners' argument on this point had no legal basis.

The Court then traced how the priority mechanism reached its current form. Decision 77/PUU-XXII/2024 had already given constitutional shape to the idea of priority for entities other than state- and region-owned enterprises, treating it as an affirmative instrument based on a priority offer within an auction framework rather than an absolute privilege. The government responded with the fourth amendment to the Mineral and Coal Mining Law, widening priority well beyond the religious mass organisation route set out in Government Regulation 25/2024 to companies, cooperatives, sole proprietorships, small and medium enterprises and larger private undertakings. The academic paper accompanying the bill identified eight gaps behind the revision, among them the absence of priority permit areas for small and medium enterprises, for enterprises owned by religious mass organisations, for universities and for downstream processing, the lack of a route for returning overlapping concessions to the state for re-auction, weak exploration for new reserves, and the absence of a rule allocating part of non-tax mining revenue to supervision and guidance.

Against that background the Court identified a difference in terminology that carries legal consequences. Pasal 51(1) and Pasal 60(1) speak of an award by way of priority, while Pasal 83A(1) of Government Regulation 25/2024, the historical root of the instrument, speaks of an offer on a priority basis. An offer presupposes an invitation that the recipient must answer and whose conditions the recipient must satisfy. An award suggests an active conferral by government, closer to a determination than to an invitation, under which the listed entities hold a privileged position by operation of the provision itself and without any offer stage. The Court also observed that the listed entities differ sharply in character, from small enterprises with limited capacity to cooperatives with collective membership structures and enterprises tied to religious organisations. Grouping them under one priority regime raises the question of how the state keeps the mechanism working as an affirmative instrument rather than as an opening for favouritism or misuse of authority. Priority is therefore compatible with the Constitution only where it operates as a priority offer inside a selection process that is transparent, accountable and fair, and not as a direct appointment. That reading sits alongside the Court's treatment of the same instrument in its ruling on priority grants of mining permits to private entities and its account of licensing rather than contract as the basis of mineral rights.

The Ruling

The Court granted the petition in part. It declared the phrase providing for an award by way of priority in Pasal 51(1) contrary to the 1945 Constitution and without binding legal force unless interpreted to mean an award by way of priority "that may only be given with clear parameters through an objective, transparent and accountable assessment process, so that the priority award is not understood outright as an act of direct appointment". The Court applied the same conditional formula to the priority wording in Pasal 51(3) to (6), in Pasal 60(1) and Pasal 60(3) to (6), and to the phrase granting priority in obtaining a special mining business permit in Pasal 75(3). The priority route therefore survives, but only as a screened offer, and permit authorities must now show the parameters and the assessment behind each priority award. Licensing practice under the ruling continues to run through the risk-based business licensing standards for energy and mining.

Read the full decision in the official record.

Methodology: This memo summarises the official decision text and is not legal advice; report corrections to contact@crpg.info.

Disclaimer

This article was AI-generated under an experimental legal-AI application. It may contain errors, inaccuracies, or hallucinations. The content is provided for informational purposes only and should not be relied upon as legal advice or authoritative interpretation of regulations.

We accept no liability whatsoever for any decisions made based on this article. Readers are strongly advised to:

• Consult the official regulation text from government sources
• Seek professional legal counsel for specific matters
• Verify all information independently

This experimental AI application is designed to improve access to regulatory information, but accuracy cannot be guaranteed.