Slater & Gordon are investigating whether BHP might have a case to answer to because Ravensthorpe locals claim the mining giant encouraged them to build their businesses as recently as last year.

The mine closure resulted in 1800 workers losing their jobs, and expectations that a large portion of the population will leave the town.

The mine was opened last year and predicted to have a 25-year life, with the state and Federal Government also contributing funding to encourage infrastructure development in the town.

BHP said in a statement that the mine was closed as a result of "diminished prospects for profitability of Ravensthorpe" in the wake of a weakening nickel market.

Tim Hammond from Slater & Gordon told WA-based 6PR radio that he believed there could be a case for compensation worth millions of dollars, with the firm's investigations focusing on when BHP knew their mine would face imminent closure.

"It appears BHP was very active in encouraging small business owners to provide services," said Hammond.

- Angela Priestley