(Yicai) March 11 -- China Northern Rare Earth Group, the country’s biggest supplier of rare earths, is infusing another CNY2 billion (USD278.4 million) into a subsidiary that is building the world’s largest production facility for rare earths, despite a huge drop in profit last year.

Baotou Huamei Rare Earth High Tech is constructing a CNY7.8 billion (USD1 billion) smelting plant in Baotou, Inner Mongolia Autonomous Region, Northern Rare Earth said in March last year. Once completed, the factory will process 198,000 tons of mixed rare-earth concentrates with 58 percent rare-earth oxides a year.

The mammoth undertaking comes despite Northern Rare Earth saying in its latest performance forecast that it expects net profit to plunge at least 61 percent last year from the year before to as little as CNY2.3 billion (USD324.4 million).

The price of major rare earths, such as neodymium and praseodymium oxides, has been sliding since the beginning of last year due to a big drop in demand. And the downward trend is expected to continue this year, the Baotou-based firm said at a recent investors event. Many of its raw material suppliers took their time to resume production after the Lunar New Year holiday last month and demand remains below expectations.

Editor: Kim Taylor