Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co, China's largest rare earth miner normally abbreviated to REHT, raked in 3.2 billion yuan ($500.1 million) in revenue during the first half of the year, a 35 percent year-on-year increase, according to its latest financial report.

Profit rose a more-modest 2 percent to 261 million yuan during the period, it said, amid a tough time for the industry in China, which has seen as many as 90 percent of domestic rare earth mining firms falling into the red, as prices have dropped for the specialist commodity.

The domestic cost of rare metals has been plummeting since 2011 due to an oversupply caused by smuggling and black market trade.

The prices of neodymium oxide, for instance, which is generally extracted and refined from rare earths, dropped a further 6.5 percent to 293,000 yuan per metric ton during the first half.

Chen Zhanheng, deputy secretary-general of the Association of China Rare Earth Industry, said the major reason behind REHT's revenue surge was primarily its efforts at pushing downstream businesses, as well as its huge stockpiles of available material.

"On those stocks, there is no need to pay tax, which has added to its revenue," he said.

"Judging from its report, rare earth prices are very close to the company's production costs, amid an industry slowdown which is very obvious to see."

Chen said compared to rare earth mines in southern China, northern sites have remained more profitable because of different minerals contained in those mines.

REHT's report claimed uncertainties over the global economic recovery, coupled with domestic economic growth, which "still faces heavy downward pressure", have hurt demand for downstream rare earth products.

"Overcapacity is still overwhelming in China and demand from downstream consumers is still weak," Chen said.

A recent report from RnR Market Research showed that while annual production of rare earth extraction companies exceeded 300,000 tons across China, industry demand was at below half that.