Mining company BHP Billiton has confirmed it is looking at cutting 3,000 jobs from its iron ore operations in Western Australia.

A spokeswoman said 500 jobs have already been cut in recent months including 100 at its headquarters in Perth.

She said external consultants have been employed to review its iron ore operations, which currently employs 16,000 people.

The ABC understands many of the jobs losses will involve contractors whose positions are coming to an end and their contracts will not be renewed.

BHP says it has been open about the review and holds regular meeting with workers to keep them updated.

The spokeswoman says the job cuts are necessary to ensure BHP Billiton remains a competitive, world-class operation.

In a statement released to the ABC this morning, BHP defended the job cuts.

“BHP Billiton Iron Ore regularly undertakes improvement initiatives and organisational reviews. We have engaged external consultants to assist with this process.

This is about continuing to safely improve our business and ensuring we are a competitive, world-class operation.

We have been open with our employees about the review, and we hold regular all employee Town Hall meetings and question and answer sessions with the business leaders as a matter of course.

In situations where employees are impacted we will undertake every effort to assist them throughout the process and to seek redeployment opportunities where possible.”

It is understood private consultants are recommending BHP shed 20 per cent of its current workforce in its iron ore division to ensure it remains competitive.

Iron ore prices have fallen more than 30 per cent this year to around $90 a tonne.