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MITTIMATALIK/POND INLET - In the wake of the global economic crisis, Baffinland Iron Mines Corporation has been unable to find a strategic financing partner for its $4-billion Mary River iron ore project.

Baffinland Iron Mines president Gord McCreary stands atop a mountain of iron ore at Milne Inlet, located at the Mary River site. - photo courtesy of Baffinland Iron Mines Corporation

President Gord McCreary said the company will cut back "considerably" on spending on Mary River this year.

Last year the company was in talks with a dozen other companies who all completed due diligence on the project, which is located 160 km south of Pond Inlet and is slated to begin commercial production in 2014.

While the identity of those companies is confidential, "These are some of the largest mining companies and some of the largest steel companies and some of the largest trading houses in the world," said McCreary. "The biggest of the big."

Many of those companies expressed "serious interest" in May River, but the collapse of Wall Street in September scared them away, said McCreary.

"There's lots of interest in the project, but unfortunately ... they're all like deer in the headlights," said McCreary of potential partners. Such partners are crucial for such an immense and costly project, he said.

"We're not going to raise money on our own," he said. "We need deep pockets around us."

While the search for partners is currently at a standstill, McCreary remains optimistic about the project, pointing to the fact that the price for iron ore listed in the project's feasibility study (released early last year) was only half of what it is in today's troubled market.

He said demand for iron ore, a crucial ingredient in the production of steel, will remain strong.

"Our society revolves around some key commodities - obviously oil, but coal and iron ore are like numbers two and three (as far as) the global commodities that float around the planet," he said.

Also cause for celebration are the initial results from a 113,000-tonne bulk sample extracted from Mary River last year, which McCreary termed as "extremely favourable."

The company is still pushing ahead with drilling plans for Mary River this summer with the aim of increasing the project's resource base.

"That is the focus for us during this turbulent time," said McCreary. "We're more focused on exploration at the moment.

That doesn't mean we're giving up on development and pursuing strategic partnering, but without strategic partners, how do we move forward on development?"

Considerably less money will be spent on the project this year.

Last year Baffinland spent $200 million on Mary River. McCreary could not specify by precisely how much this year's budget will shrink compared to last year, only that the decrease will be substantial.

He said the company is in constant dialogue with its contractors, 40 per cent of whom are Northern.

Of the 250 Inuit land claims beneficiaries who worked on-site at Mary River last year, McCreary could not say how many of them would be affected by the cutbacks on spending, saying staffing numbers will largely depend on this year's budget, to be released later this month.