Nahdlatul Ulama faces internal fracture after accepting a controversial coal concession
A policy meant to redistribute economic opportunity has instead ignited one of the most serious internal crises in Indonesia’s Islamic civil society, exposing tensions between faith, politics, and business interests.
A Policy That Triggered Division
Indonesia’s decision in 2024 to allow religious organizations to manage mining concessions has deeply divided Nahdlatul Ulama, the country’s largest Islamic organization with an estimated 80 million members. NU was awarded a 26,000-hectare coal mining concession in East Kalimantan, previously held by a Jakarta-based company. Although mining operations have yet to begin, the concession has already sparked open conflict within the organization.
Grassroots Pushback and Reputational Concerns
Many NU grassroots members have urged their leadership to return the mining rights to the government, arguing that the concession is the root cause of escalating factional disputes. They warn that public infighting is eroding NU’s moral authority and long-standing reputation as a champion of moderate Islam in Indonesia.
Elite Rivalries and Business Interests
Dr A’an Suryana of the ISEAS – Yusof Ishak Institute described the crisis as far deeper than past internal disagreements, pointing to rivalry between elite camps backed by competing business interests. He noted that NU lacks the technical and financial capacity to manage mining independently and would inevitably need private partners, a reality that has intensified power struggles even before production begins, according to The Straits Times.
Politics Behind Economic Equality
The regulation enabling religious groups to operate mines was issued in May 2024 by then President Joko Widodo, following a Cabinet discussion on reducing economic inequality. While framed as a way to broaden access to Indonesia’s natural wealth, observers argue the policy is politically motivated. NU is a key political constituency, and securing its support has long been a priority for political elites.
Economic Stakes and Resource Wealth
Indonesia remains the world’s largest exporter of thermal coal and holds the largest global reserves of nickel, a critical material for electric vehicle batteries. Coal exports generated US$30.48 billion, or approx. S$39.1 billion, in 2024, down from the previous year due to lower global prices, according to Indonesia’s national statistics agency. These vast economic stakes have only heightened internal competition over resource control.
Calls for Caution and Ethical Responsibility
At a Dec 17 gathering in East Java, NU executive board member Yenny Wahid warned that entrusting responsibilities to unqualified parties invites disaster. She urged returning the mining rights to the government and suggested state support for mass organizations should come through direct funding for schools, hospitals, and social programs instead. Her remarks were widely seen as a plea to prioritize unity over profit.
Leadership Crisis and Search for Resolution
The conflict escalated after NU’s Supreme Council dismissed chairman Yahya Cholil Staquf on Dec 9, appointing Zulfa Mustofa as acting chairman. A major consultative meeting on Dec 21, attended by 55 percent of NU’s regional branches, called for an extraordinary congress to elect a new leader free from business conflicts. While some leaders proposed alternative uses for the concession, such as a carbon credit project, the Supreme Council later pledged on Dec 27 to reinstate Mr Yahya as part of reconciliation efforts.
The NU mining dispute highlights the risks of blending religious authority with high-stakes resource management in a politically charged environment. For Indonesia, the episode raises broader questions about governance, equity, and institutional integrity. For Singapore and the wider region, it underscores how domestic political fractures in Southeast Asia’s largest economy can influence stability, investment confidence, and the future balance between economic ambition and social cohesion.
Sources: Straits Times (2025) , The Star (2025)
Keywords: Nahdlatul Ulama, Coal Mining Concessions, Indonesian Politics, Religious Groups Economy, Energy Resources
