The Cockatoo Island mine, located off the Kimberley coast, has had a checked history.
It was first managed by BHP in 1950. The project was closed decades later, when the ore body had been mined to sea level.
HWE Mining and Portman Mining later reopened the mine and constructed a sea wall to prevent tidal water from flowing into the pit, allowing mining to continue below sea level.
The mine was closed again after the most recent owners, Pluton Resources, became insolvent.
Now, the island's Traditional Owners, the Dambimangari, say they are deeply worried that flooding at the mine will result in the sea wall collapsing completely, covering surrounding coral reefs with sediment and contaminating a humpback whale migration route.
Dambimangari Aboriginal Corporation chief executive Peter McCumstie said the community was keen to see action to make the area safe, including possibly using the WA Mining Rehabilitation Fund.
The Department of Mines and Petroleum says Pluton's receivers Pitcher Partners are maintaining the mine site.
"DMP has been advised that further funding has been made available to reinstate Cockatoo Island mine site's care and maintenance works," the department told AAP.
"Personnel and equipment have been remobilised, and dewatering works have recommenced.
"DMP understands that while some slumping of internal pit walls has occurred, the seawall itself remains intact and unchanged, and is being monitored."
The department says mining may resume if a new owner is found, and companies have shown interest given iron ore on Cockatoo Island is very high grade and low in impurities.
If the mine doesn't sell and is formally declared an abandoned mine site, it could be considered for remediation through the Mining Rehabilitation Fund, the department said.