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MITTIMATALIK/POND INLET - Exploration and workforce cutbacks recently announced by Baffinland Iron Mines Corp. will have a major effect on communities such as Pond Inlet, where the company is a major employer, said Chris West, president of the Baffin Regional Chamber of Commerce.

"It's all going to be a trickle-down effect. Everybody is going to suffer from it because the money is not going to be in the communities," said West.

"We did see a lot of jobs, a lot of new jobs and a lot of jobs for our beneficiaries that weren't there before," he added.

Baffinland's $4-billion Mary River iron ore project is located 160 km south of Pond Inlet and is slated to begin commercial production in 2014.

Baffinland will reduce its full-time workforce by 35 per cent, from 40 people to 26 people, and is closing satellite offices in several locations across the North.

It will invest $30 million into exploration to fund one drill program and one resource estimation.

It is contractor cuts, however, which will hurt groups in Nunavut the most.

West estimates about 200 to 250 local contractors were employed at the site last year. This year, he said, the company is going to be looking at 40 to 60 contractors in the region.

"And these guys weren't making minimum wage, they were making big dollars (and) reinvesting it into their communities," said West.

The squeezed cash flow will be felt in some way by many businesses, he added. To see an example, one simply needs to look at a grocery store, he said.

However, West was quick to say he doesn't believe Baffinland is "dead," and expects it will become a top employer in the Baffin region once again when the recession lifts.

Gord McCreary, Baffinland president and CEO, agreed.

"Ultimately, when this project is in construction, it won't be hundreds of people involved in it - it will be thousands of people involved in it," he said. "Obviously, yes, it is our desire to staff back up in due course, but I can't tell you when that's going to be."

McCreary said the cutbacks were not easy, but necessary under the financial restraints the company is feeling in the global economic crisis.

Baffinland has kept its core team and it will be able to move forward - at a faster pace - once conditions improve, he added.

And, besides, said McCreary, Baffinland is in a more comfortable position than many mining and exploration companies feeling the heat of the meltdown.

"Our budget is still reasonably significant. I mean $30 million is nothing to sneeze about," he said, referring to Baffinland's drilling budget.

"We will be growing this year. Not many companies will be able to say that this year," he added.

Recent figures released by Indian and Northern Affairs Canada reported a total of 122 prospecting permits issued in Nunavut for this year - nearly 100 fewer than last year.

McCreary said he is staying positive.

"Our job is to make sure we're standing with our world-class deposits when conditions are right and move things forward again - and we will be," said McCreary.