Fire has destroyed a 50-metre high conveyor belt at the southern end of BlueScope's Port Kembla Steelworks.
NSW Fire and Rescue Inspector Jay Bland said the blaze began when friction caused the conveyor belt to snap about 3am Saturday morning.
He said the snapping of the conveyor belt then generated more heat, and the fire spread.
At the peak of the fire, 30 NSWFR officers from Warrawong, Wollongong, Unanderra, Dapto and Balgownie fought the blaze. A cherry picker and HAZMAT crew also attended.
Inspector Bland said officers' main concern was the potential for dust on the conveyor belt to explode.
"The fire was quickly brought under control within an hour," he said. "Because it was on a conveyor belt they had to isolate power."
Inspector Bland said the professionalism of BlueScope staff on site was to be commended.
No-one was injured. It was the second time in a week Fire and Rescue officers were called to a blaze at BlueScope, with a fire at the site's recycling area on May 2.