Future of critical minerals | India's fibre challenge | The Daily Brief

[00:00:00]In today's episode, we'll break down two important stories. First, we'll talk about the global critical mineral outlook and then we'll talk about the hidden gap in India's mobile internet ecosystem. Welcome back to the daily brief by Zerodha, where we cut through the noise to help you understand what's actually happening in the most important stories from business and markets. I am your host Axara and today is Wednesday, [music] 22nd July.

[00:00:30]Coming to the first story, almost everything we imagine our future running on depends on a very specific set of metals. Electric cars, solar farms, wind turbines, giant data centers, and even modern weapons all need them. Lithium, cobalt, and graphite go into batteries, while copper is the wiring that holds everything together. Rare earths make the magnets that spin inside electric motors and wind turbines. And then there's a long list of metals you've probably never heard of, like gallium and germanmanium sitting inside your phone and every computer chip. These are called critical minerals. They're critical because for one reason or another, whether geopolitical or geographic, they are hard to secure. And yet, it's difficult to imagine a modern economy without them. Every country has its own definition of what counts as critical. And India does too. Its current list includes 30 minerals. So, what makes a mineral critical? Every year, the International Energy Agency or IEA publishes a major report on critical minerals. For most of the past decade, the big question was whether the world was mining enough of these metals to keep up with demand. But this year's report puts emphasis on something else.

[00:01:42]Instead of worrying about how much is in the ground anymore, it highlights how a handful of countries control a lot of its supply. That became problematic when last year these countries started weaponizing this control. Now to be fair, people had been warning about this for years, but it only grabbed everyone's attention once it started disrupting industries around the world.

[00:02:02]That's just one takeaway from a report that runs over 300 pages. We can't cover all of it, but here are five things that stood out.

[00:02:12]So, how critical minerals are distributed across the world is largely a geographic lottery. Some countries are simply more naturally endowed than others. But that's not the real problem.

[00:02:23]Nor are we running out of these minerals anytime soon. The problem is that a lump of raw ore is useless for any factory.

[00:02:30]It first has to be cleaned and refined into an extremely pure form. And that refining is a huge, difficult, dirty industry all on its own. Unsurprisingly, China dominates this business. It refineses most of the world's lithium and cobalt and almost all of its batterygrade graphite. And Indonesia plays the same role for nickel. Together over the past 2 years, those two countries accounted for more than 3/4 of all the new refining capacity added anywhere in the world. So in other words, the biggest players kept expanding their lead in the minerals they already dominated. And that only made the world's dependence on them even deeper. A concentration that should make any country uncomfortable. So why doesn't everyone else just build their own refining capacity? For one, it's expensive. China's expertise has brought prices down within the country. But the same refinery outside China costs 20% to 150% more to build. And it's also roughly 50% more expensive to run in large part because power and materials are pricier everywhere else. On top of that, the byproducts of refining rare earths are incredibly toxic and many countries have simply been unwilling to subject their citizens to the same level of pollution. As a result, even though the world understands the importance of diversifying away from China, in theory, its hold over critical minerals only grows stronger. Now, this creates a massive dependency even for countries that have critical mineral raw materials. You can dig up your own lithium in Australia, but as long as China maintains its chokeold on refining the metal, the dependency remains, but that might be changing. Many countries that have critical mineral deposits are trying to prevent it from leaving their shores. For instance, Congo, Zimbabwe, and Mozambique have all put controls on their raw cobalt, lithium, and graphite.

[00:04:21]So to access those deposits, investors have to set up refineries in those countries, giving them both investment and resilience.

[00:04:30]For years, people knew that China's dependency on refining was a huge deal.

[00:04:35]And last year, this became a little more evident. And then in April 2025, China put export controls on seven of the heavy rare earths. These rare earths make the magnets inside electric motors, and there's no easy substitute for them.

[00:04:49]So, the Chinese exports to the world dried up, and car makers in the US and Europe couldn't get the magnets they needed. Consequently, some auto markets slowed their production lines while others flat out stopped building cars.

[00:05:02]This also showed up in prices for these metals. For the minerals that China restricts, there are now two prices. A cheaper one inside China and hefty premiums for the same metals in European markets. For context, in Europe, gallium and the heavy rare earths cost around five times the Chinese price. Across 2025, tungsten used for making cutting tools shot up six-fold and lithium more than doubled. Then in October 2025, China went a lot further. It floated rules saying that any product made anywhere on Earth that contains Chinese rare earths or was even made using Chinese technology would need a Chinese license to trade. That's a wild reach stretching into products that never even touched China. So the IAA estimated that if this were fully enforced, roughly $6.5 trillion a year of production outside China would be at risk. Now China paused the tougher version for a year until November 2026. Everyone rejoiced but knew that the threat was not gone, just delayed. China also announced controls on the battery supply chain, including graphite anodes and the machines used to make batteries, putting another $300 billion a year of outside production at risk.

[00:06:17]As we all know, the closure of the strait of hormones broke a lot of things globally. One such thing was sulfur. Its key use is in being converted into sulfuric acid which is essential for processing copper, nickel, cobalt, lithium and rare earths and is also a key ingredient in fertilizers. Now the Middle East supplies about a quarter of the world's sulfur and half the world's shipped sulfur passes through the straight of hormones. And that's because sulfur is recovered as a byproduct when crude oil and natural gas are processed.

[00:06:46]Since the Middle East is a major producer of both, it has also become the world's biggest hub for sulfur exports.

[00:06:52]So what happened when this trait was disrupted? Naturally, sulfur prices jumped and that pushed up the price of sulfuric acid as well. For lithium refiners, sulfuric acid, which had accounted for about 3% of production costs, suddenly rose to roughly 11%. and that made lithium more expensive to produce. Higher sulfuric acid prices also raised fertilizer costs just as planting season began, creating a food security problem, especially for poorer countries. And it wasn't just the well-known minerals that got caught up in this. Lesserk known metals like gallium, germanmanium, tungsten, and antimony also rely on sulfuric acid during refining. These metals ultimately end up in AI hardware, data centers, defense equipment, and clean energy technologies. So in other words, a disruption in sulfur supply left industries ranging from automakers and chip makers to defense firms competing for the same critical input. The same turmoil in the Middle East also knocked out a meaningful share of the world's helium supply. Now that's a gas without which semiconductors can't be manufactured.

[00:07:57]So you would expect that with all this chaos and prices rising, investors would be rushing to build new mines and refineries to cash in. After all, one person's problem is another person's opportunity. But the opposite happened.

[00:08:10]Investment in critical minerals actually fell 9% in 2025, the first decline in years. And what stood out the most was lithium companies slashing their investment budgets by around 40%. Now, that raises an obvious question. How do refineries shy away from investing when metal prices are soaring? Refineries don't make money by selling the metal.

[00:08:32]They make money by charging miners a fee to process raw ore. So, China built so many refineries that there simply isn't enough or to keep them all running at full capacity. So, they started undercutting each other to win business.

[00:08:45]Those processing fees collapsed to zero in 2026, the lowest level on record. As a result, miners pocket the profits from high metal prices while refineries process increasingly valuable for almost nothing and bleed cash. This is something that we looked at in our previous story on copper as well. Now, there's another interesting angle. Many of the rarest critical minerals aren't mined directly at all. They're recovered as byproducts when base metals like copper and zinc are smelted. So, if those refineries start shutting down because they aren't profitable, the world also loses one of its few sources of these niche but essential minerals.

[00:09:25]Put all of that together and India is in a pretty awkward spot. Our appetite for these minerals is only growing and India added renewable energy capacity at one of the fastest rates among major markets in 2025. That also makes us more vulnerable because our solar farms, batteries, and EVs all depend on supply chains we have little control over. We own almost none of the global refining capacity. And then there's helium. Qatar supplies more than half of India's helium and we needed to manufacture everything from MRI scanners to electronics. India is also a major producer of sulfuric acid but it relies on imported sulfur to make it. So we're heavily dependent on importing the raw materials yet we're also struggling to stay competitive in exporting the products made from them. So India's manganesees alloy exporters are a good example. They are facing a difficult 2026 because Europe their biggest market is capping imports and introducing a carbon levy that could have India's shipments. So the one hopeful thread is recycling by recovering metals from used batteries and old electronics. It could significantly increase India's domestic supply by 2040 and matters more for a country with limited mineral deposits than almost anywhere else. But that's still a distant goal. Building a large scale recycling ecosystem is a challenge in itself with no easy answers. If you prefer reading the daily brief instead of watching the video, check out the link to the newsletter in the description. Coming to the second story, without a doubt, India's mobile internet story is one of the great infrastructure achievements of the last decade, especially after the advent of Jio.

[00:11:04]Today, India has over 1 billion broadband connections. Mobile data costs a fraction of what it does in most countries. Of those 1 billion connections, only 47 million or less than 5% are fixed wine. The rest is mobile data. Now, that sounds fine.

[00:11:20]After all, for us, internet consumption was normalized through the smartphone.

[00:11:24]But that's not true for other countries, including and especially those at a similar stage of development as us.

[00:11:31]Everywhere, fixed line networks carry the bulk of internet traffic. India is one of the few countries in the world where mobile networks carry more total data than fixed line ones. Now, this is an imbalance that didn't matter much when the internet was mainly about WhatsApp messages and YouTube videos.

[00:11:47]But as cloud computing, AI applications, tele medicine, and digital governance scale up, the absence of a reliable fixed line backbone may become a structural vulnerability. That is the hypothesis of a new policy brief from the think tank I cryer that we'll be looking into today and we recommend reading it in full if you have the time.

[00:12:07]But there's a disclosure about the report that's worth noting up front. So this report comes from iicar's invict where vict stands for vodafone idea center for telecom. So this research center is co-backed by V, the third largest telecom operator in the country, a company with a troubled history trying to make a comeback. It would directly benefit from many of the reports recommendations. Now that doesn't make the analysis dubious or incorrect, but it's worth keeping in mind as we get into the policy prescriptions.

[00:12:38]So if mobile data is cheap and widely available, why does India need Wline at all? The answer comes down to three things. The first is capacity. When hundreds of people in a neighborhood are streaming, working from home, or running cloud applications at the same time, a mobile network congests because everyone in the cell towers radius is sharing the same airwaves. But a fiber connection to your home doesn't have that problem. A single fiber optic cable can carry orders of magnitude more data than a cell tower. The bandwidth is yours and it doesn't degrade because your neighbor started a video call. The second is reliability. Mobile signals are affected by weather, building walls, distance from the tower, and how many other people are connected. Fiber is a physical cable that delivers consistent speeds regardless of what's happening around it. And that consistency matters enormously for the kind of applications India is betting its future on.

[00:13:32]cloud-based AI services, remote health care, where a doctor in a city hospital monitors a patient in a rural clinic in real time, factory automation, digital governance, all of these need connections that don't drop or slow under strain. Now, the third factor is the most interesting of all. It's that mobile networks themselves depend on wine. So, the cell tower your phone connects to needs a fiber optic cable running from it back to the core network and this is called back haul. Now the last hop to your phone is wireless but everything before that should be fiber.

[00:14:05]Without good fiber back haul even a 5G tower delivers mediocre speeds. So India's tower fiberization rate which is the share of cell towers connected to fiber stands at roughly 36%. The government's own target was 70% by 2024.

[00:14:20]In contrast the same number in North America is 70%. And in South Korea and Japan where fiber broadband penetration exceeds 85% the figure is even higher.

[00:14:30]So building W line isn't a separate agenda from mobile but a precondition for the quality of mobile data itself.

[00:14:39]So what is the state of India's fixed line infrastructure? Now India's average fixed broadband download speed is about 64 Mbps while mobile broadband clocks in at around 101 Mbps. In essence in India your phone gives you faster internet than your home broadband. We are one of the very few countries in the world where that's the case. In most places, fixed line speeds are two to four times faster than mobile. But that's less a reflection on India's mobile internet and more on the poor health of our fixed line infrastructure. And some of the reason has to do with economics. A fixed broadband basket costs about three times the price of a mobile data plan as a share of monthly gross national income per capita and about double the global average. So you have a product that's slower than its mobile alternative while also costing significantly more. Why would anybody buy that? Lower demand in turn creates a vicious cycle. Service providers can't justify investing in upgrading fixed line networks when few people are subscribing. Without investment, quality stays poor. Poor quality keeps demand low and the cycle reinforces itself and India's wine infrastructure falls further behind. Now go and are the biggest fixed line providers but regional ISPs like Excital and legacy cable operators like GTPL also play a role. BSNL the state-owned operator still runs much of its last mile delivery on aging copper lines late decades ago.

[00:16:07]So it was to fill this gap that in 2011 the Indian government launched Bhatnet a nationwide program with rupees 1.3 lakh cr worth of commitment to bring fiber connectivity to every village in the country. By 2020, the scope had expanded to cover all inhabited villages and a public private partnership or PPP model was approved for 16 states to bring in private operators for last mile deployment. But the results have not matched the ambition. As of September 2025, only a little over two lakh villages out of a target of more than 6.5 lakh have been connected. Now the budgeted expenditure for Baratnet in FY202526 was rupes 22,000 cr but only 25% of it was utilized. Part of this underperformance is slow execution but as per I crier the biggest reason lies in the flawed design of the funding mechanism itself. So India finances its broadband push partly through the universal service obligation fund now renamed the digital barat nidi or DBN.

[00:17:06]And the fund is built on a simple idea.

[00:17:09]Telecom operators pay a 5% levy on their revenue and that money is used to extend connectivity to underserved areas. Now the problem is that this levy flows into the consolidated fund of India which is the government's general kitty and that then has to be reallocated through the annual budget process before it reaches the TBN. So this creates a structural gap between collection and dispersement.

[00:17:32]Money collects in the fund gets stuck in the budgetary pipeline and sits unused.

[00:17:37]And as of March 2026, over rupees 1 lakh cr remains unutilized.

[00:17:44]Now other countries faced similar challenges and their approaches offer a useful contrast. Chile for instance built its fiber backbone through PPPs.

[00:17:54]The Fibbra Optica Natsunal which is a 10,000 kilometer network received about $120 million in government subsidies.

[00:18:02]Now, Chile's network is a wholesale access, meaning multiple ISPs, no matter how big or small, can access the same infrastructure on equal terms. So, this also implies that there's little duplication of fiber laying efforts by operators. So, to incentivize the network buildout, the country also ran reverse auctions where the operator that bid the lowest subsidy while meeting defined service levels won. By 2022, nearly 60% of Chile's fixed connections were fiber and its broadband speeds led Latin America. Brazil, which is often compared with India for its size and development challenges, built a competitive and fragmented market where smaller providers hold more than half the fixed broadband base. Much like Chile, wholesale networks have been crucial to this. Fixed broadband connections grew by about 43% between 2020 and 2024. Meanwhile, Singapore structurally separated the passive infrastructure, which is the fiber cables, from the active infrastructure, which are the routers and switches in its nationwide broadband network, and mandated equal wholesale access for all downstream operators. This prevented the fiber owner from favoring its own retail services. And today, over 85% of Singapore's homes have access to speeds of at least 1 GPS. South Korea used PPP specifically for rural areas, bringing together central and local governments with major ISPs to connect about 1,300 villages between 2020 and 2022.

[00:19:29]Now, the ACT cryo brief maps India's existing initiatives against these international experiences and identifies several gaps. The most fundamental fix is to ring fence the digital barat nidi and that will involve either bypassing the consolidated fund entirely or establishing a timebound transfer obligation backed by legislation.

[00:19:49]Without this, no amount of additional funding translates into outcomes. The second fix that I cry recommends is accelerating BSNL's copper to fiber conversion. Combined BSNL and MTNL have the largest fiber footprint of any single entity in India roughly 15.85 lakh root kilometers when you combine their own network with Baratnet. So BSNL alone accounts for about 37 to 38% of the country's entire fiber footprint.

[00:20:16]Yet much of its last mile delivery still runs on aging copper which caps broadband speeds and reliability. So while it continues to lay new fiber connections, the old ones keep rusting without being decommissioned and effectively it pays maintenance costs for both. Given BSNL's budgetary issues, those costs are unaffordable. So this conversion needs capital ring fence from BSNL's rupees 1.64 lakh crit revival package, measurable annual targets for copper retirement and a defined schedule for decommissioning copper. The third fix is on the question of competition which is where the incentives behind the report come into play. Now we all know that India's telecom sector has gravitated towards a duopoly with the two largest players capturing 75% of market share. Now India doesn't impose wholesale access obligations on its dominant telos. It is technically permitted under unified license conditions but it's not mandated. So each large operator builds its own last mile network, duplicating investment in profitable urban areas while leaving unprofitable areas unserved. Now the brief recommends mandatory wholesale access, transparent interconnection pricing, and an offset in the AGR duty levied on Telos if they invest in rural fiber capex. And these are legitimate policy ideas with international precedent. But notice who benefits the most. Mandatory wholesale access would let operators who haven't built their own fiber like V piggy back on networks that Jio and Airel spent billions constructing and AGR levy offset gives proportionally more relief to a company whose AGR liabilities nearly bankrupted it. As such VA has been successfully lobbying for reductions in their AGR dues in the past few months. But none of this means the recommendations are wrong. The duopoly structure indeed discourages investment in unserved areas. The reforms are meant to help all competition big or small but we would be the most immediate beneficiary.

[00:22:15]India built one of the world's most impressive mobile first internet ecosystems and the next challenge lies in building the second layer successfully across the whole country.

[00:22:24]The fixed line backbone is what every mature digital economy relies on. Now, we don't necessarily lack capital to make this happen, but the report highlights where we do lack institutional capacity. That includes fixing the plumbing of public funds, mandating infrastructure sharing, and recognizing that cloud AI, smart manufacturing, and remote healthcare can't run on mobile networks alone. Now, coming to the tidbits, the RBI said it received 17.41 $41 billion via FCNRB deposits swapped under a zerocost facility, $1.97 billion through overseas foreign currency borrowings by banks, and $1.34 billion via external commercial borrowing swaps totaling $20.7 billion. The crisis era measures announced amid sustained rupee pressure from elevated oil prices were aimed at boosting dollar inflows. We covered the FCNR deposits here. Coming to the next tidbit, Minister of State for Finance Pankage Chowri told the Lok Sabha that UPI processed 24,162 cr transactions worth rupes 314.23 lakh cr in FY26 up from 18,587 cr transactions worth rupes 260.56 lakh cr the year before. NPCI international is also expanding UPS global reach with crossber payments now live in Greece, Nepal and Cambodia. Coming to the next tidbit, Honeywell Aerospace has landed a deal to supply Indigo's new Airbus A320 Neojets with auxiliary power units, weather radar, traffic collision avoidance systems, and flight management systems. This was the largest new aircraft selectable equipment win in the history of Honeywell, which has supported Indigo's operations since 2015. Coming to the next tidbit, Coca-Cola appoints JP Morgan, City, Kodak, and Morgan Stanley for its Indian bottlers 2027 IPO. The beverage giant confirmed in June that it's preparing to list Hindustan Coca-Cola holdings and may sell part of its stake joining a broader wave of global companies including Pano Ricard and Kalsburg looking to tap India's equity markets.

[00:24:26]Coming to the final tidbit, NPCI is developing an offline tap and pay UPI for flights and underground metros. The feature will let users load money onto an ondevice UPI light wallet and tap their NFC enabled phone on a certified POSOS terminal to pay up to rupees 2,000 with no internet needed on either end.

[00:24:43]NPCI is expected to begin certifying merchant terminals from leading POS manufacturers this year. That's all the news I have for you. Thank you so much for watching and see you in the next one. Disclaimer, this content is forformational purposes only. None of the stocks, brands, or products mentioned are recommendations or endorsements.