The fire, which broke out on Sunday morning, was fanned by strong winds with gusts up to 45km/h sending thick plumes of black smoke high into the air and across the town.

In its 5pm Monday update, Fire and Rescue NSW said it has monitored the air quality and all readings have been within acceptable levels with any previous evacuations precautionary only.

Following concerns from the community regarding water and air safety, Fire and Rescue NSW issued the following advice:

- Water tanks: first flush systems will remove particulates from roof tops.

- Wash down any external items, particularly those with visible ash deposits.

- Any outdoor pet water or food should be discarded and refreshed.

The public water supply remains the most reliable source of good quality drinking water for the community.

NSW Health supports the use of rainwater tanks for non-drinking uses, such as toilet flushing, washing clothes or in water heating systems, and outdoors for uses such as garden watering, car washing, filling swimming pools, spas and ornamental ponds, and fire fighting.

In urban areas NSW Health recommends that people use the public water supply for drinking and cooking because it is generally filtered, disinfected and fluoridated.

Kurri Kurri High School has reopened on Tuesday.

CLOSE to 300 firefighters have joined a large-scale operation to manage a factory fire at Kurri Kurri believed to have caused millions of dollars worth of damage.

The fire has forced the closure of local businesses and a high school due to the plumes of potentially toxic smoke that has been spewing from the scene.

The fire started in a pallet of hand sanitiser stored outside buildings belonging to Weston Aluminium in an industrial complex at Mitchell Avenue, close to town, about 10am on Sunday.

It spread quickly, fanned by strong winds with gusts up to 45km/h sending thick plumes of black smoke high into the air and across the town.

The factory has a significant store of aluminium dross on-site which is highly reactive and can become explosive when wet, along with other potentially hazardous materials including hand sanitiser, paint and ethanol.

Police are now asking that anyone who may have information or footage in relation to the fire, including dashcam from the area, to contact Hunter Valley Police Station or Crime Stoppers on 1800 333 000.

Kurri Kurri high school was closed, due to COVID-19 protocols requiring schools to leave windows and doors open, contrary to EPA advice for residents to keep windows and doors closed to avoid smoke inhalation.

Fire and Rescue NSW Deputy Commissioner Jeremy Fewtrell, who is leading a team involving the departments of health and education, the Environment Protection Agency, and police, said HSC students at the school would not be affected with exams scheduled to take place at TAFE in any case.

Fires were continuing to burn in external piles of material at the site, and firefighting crews' first effort would be to extinguish those, Superintendent Fewtrell said.

"The crews' first effort will be extinguishing those, they are in a couple of locations around the site and quite extensive," he said.

"They will be using plant and other machinery to help break up those piles and get access to where the fire's burning deep below, and extinguish those. Those activities should go a long way to reducing the amount of smoke coming off the site."

The next challenge was the significant structural damage to the buildings, complicating their efforts to access and extinguish any fires still burning inside the buildings, he said.

"We'll be utilising the services of a structural engineer to ... guide us around where it is safe and how to safely access the building to look at any extinguishment that is required inside those buildings," he said.

It would be a "protracted incident", he said. "We are obviously going to move very carefully and safely throughout all this."

A fire investigator who was on scene on Sunday afternoon and early Monday morning to make some initial observations and talk to workers on scene and the first arriving firefighters was continuing to investigate along with police forensics and detectives and it was too soon to say whether the fire was deliberately lit, he said.

Superintendent Fewtrell addressed a meeting of about 150 local residents, business owners, teachers and community members at Weston Workers Club to provide an update and answer questions at 11am.

An emergency operations centre has been established on-site and an operations command centre is set up at Kurri Kurri police station to coordinate the effort. Alerts are being issued to affected community members as experts continue to use atmospheric testing equipment to monitor air and water quality.

People in properties affected by the smoke have been advised to remain indoors and to keep their doors and windows closed, with air conditioning recirculating, and to avoid the smoke wherever possible. The industrial estate remains closed off, while some local roads have also been close to keep people well away from the scene.

"It is being monitored very carefully," he said. "In the last 24 hours and over night we have had our scientific officer and also HAZMAT technicians with a range of monitoring equipment moving around Kurri Kurri and taking readings to ensure there are no major issues there, as a precautionary measure."

Hunter-based NSW Fire and Rescue units were joined by NSW Rural Fire Service units as well as pumps from Sydney and the Central Coast to help control the fire which spread from the pallets of hand sanitiser to nearby grass and bush, which was extinguished before other material in an adjoining building also caught fire after travelling along a conveyor belt between buildings.

James Camptkin, supply chain manager for Wine Selectors, situated in a neighbouring industrial complex, said the closure of his business was costing thousands of dollars of per day, and affecting his team of about 30 workers.

"I turned up ... at a quarter to seven, saw the road closures, that's when I found out," he said. "All of our employees turned up to start work at six o'clock and started ringing to say we can't get through. So some of them had received text messages because they live close."

Mr Camptkin, who lives in Newcastle, said the closure was causing "very significant" losses for the business.

"We have thousands of cartons of wine that we send out every day, so every day that doesn't happen we have to try and make that up somehow," he said, and there were scores of other businesses in the immediate vicinity which were being similarly affected.

Weston Aluminium managing director Garbis Simonian said on Sunday he believes the fire may have caused millions of dollars worth of damage, destroying two buildings about 1000 square metres each. They stored a range of materials including hand sanitiser and paint, while another building not involved in the fire housed an incinerator used to burn paint, medical waste and other types of waste.

All of the equipment was housed in separate buildings, he said.

Mr Simonian said the fire was lit in three separate locations and the pallets of hand sanitiser were wet from the rain and there was no way they could somehow have been ignited accidentally.

"It's a crime scene. Luckily no one's hurt."

Mr Simonian said the aluminium dross which people were concerned about was not as reactive as was feared but he was continuing to work closely with emergency services to ensure the site was properly managed.

"The aluminium dross itself, is not explosive especially if it's been in a fire," he said on Monday.

"We also have bays in the building up the back so what we are going to do is move it ... all that happens is it gets wet is it gets a bit smelly ... so there's no problem."

The majority of the material was hand sanitiser and paint, and they were not toxic, he said.

"There may have been some chemicals in the site, normal stuff that you would have, and some gas bottles, that's just operational stuff. But the plant was shut on Sunday morning, someone broke in through the fence and lit the fire in three places. I am not going to say a hundred per cent but it sure looks like arson. So the police are investigating ... but if you have got people who are arsonists .. what are you going to do?

"We are going to review our processes and take further action to improve the security so this doesn't happen again. But at the end of the day, if people are going to break into your plant and burn the place down, what can you do? We've done everything we can and we will improve it. We will do everything right and we will work with the EPA."