Jobs of hundreds of workers are at risk, as a large iron ore operation is hit by funding woes.

WA-based Gindalbie Metals runs the Karara Project, 200 kilometres east of Geraldton, in partnership with Chinese steel giant, Ansteel.

The 1,000-strong workforce was sent an email this week telling them that funding support from Ansteel (which holds the controlling stake in the project) will not continue.

The email cited the “impact of the economic and industry downturn” as a cause.

Gindalbie has now entered a voluntary trading halt on the Australian Securities Exchange, and says it will make an announcement to the market in coming days.

Karara Mining has issued a statement identifying a range of measures to address the cost pressures facing the business.

“These will require the active participation and contribution of all Karara's stakeholders, including its significant contractor partners, as well as from each area of the business,” the company said.

Karara Mining's general manager Patrick Bourke says the “future of a lot of people is linked to Karara” and there will be a focus on “keeping Karara running effectively”.

Karara Mining funds community projects like a mobile dental clinic in the area, and reports say these will be maintained.

The magnetite project has been hit by high costs of production in recent years, and was forced to shed about 15 per cent of its workforce due to “market conditions and the falling iron ore price” in March 2015.