Under the policy, compliant tenement holders are eligible to have their environmental bonds refunded when they join the new levy system, which will be mandatory from July 1.

Tenement holders deemed high risk will be required to pay or maintain their environmental bonds.

Issues that could qualify a company as high risk include entering administration, breaching environmental obligations and reporting requirements or not making royalty payments.

Mines and Petroleum Minister Bill Marmion issued the warnings after a recent visit to the abandoned Elverdton copper mine at Ravensthorpe on the state's south coast.

The mine, established in 1901 and forfeited in 1992, has a massive uncontained tailings dump, which is eroding into a local river catchment.

"Under the new MRF, the focus will be on avoiding the sort of environmental legacies left by abandoned projects such as Elverdton," Marmion said.

"In time, interest raised from the new fund will go towards rehabilitating abandoned mines - and the Elverdton site could be one of those considered for future priority rehabilitation."

Under the MRF, tenement holders will pay a non-refundable annual levy calculated on the amount and type of ground disturbed.

The system replaces the old policy, which required unconditional performance bonds to secure rehabilitation obligations.

The UPB is a form of contract between the mines minister and a financial institution, which commits the institution to pay an agreed sum where a tenement holder fails to meet its rehabilitation commitments.

In consideration for the UPB the institution usually charges tenement holders financing fees or requires the value of the contract to be deposited.

Marmion said the MRF would see compliant companies eligible to have their environmental bonds retired when they joined the levy system.

Pluton Resources was the first Australian Securities Exchange-listed company to opt into the scheme and receive its $19 million bond back.

"The old bonds system still has $978 million of tenement holders' funds tied up," Marmion said.

"Once [mining companies] begin contributing to the new fund, these historic bonds will be returned to them, freeing up cash for investment and ongoing rehabilitation."

Marmion said almost 70% of tenement holders had already registered for the fund, resulting in the Mines and Petroleum Department refunding more than $290 million.

Companies will need to register for the scheme and submit their disturbance data by June 30 to avoid a $4000 fine.

The Association of Mining and Exploration Companies was a driving force behind the MRF, which frees up cash to allow companies to expand exploration and other development programs.

The government said 130 years of mining had left around 17,000 abandoned sites in WA.