More than 80 firefighters are battling a massive chemical factory blaze in Melbourne’s northern suburbs.

An out-of-control fire at a factory that saw drums shoot into the air like rockets had been full of stockpiled chemicals almost three times the allowable level.

The site of a large factory fire that spewed thick smoke across Melbourne had already been suspended for stockpiling the chemicals.

Almost 200 firefighters worked to control the Campbellfield fire after midday, sparked about 6.40am and forcing nearby businesses to evacuate.

Now it’s been revealed the Environment Protection Authority was at the site less than 24 hours before the blaze broke out.

The authority said the business was storing more than 400,000 litres of hazardous materials on site, well above regulation.

The waste business at the centre of the blaze, Bradbury Industrial Services, had its licence suspended this year by the EPA after failing to clean up its act in March.

The chemical inferno caused 44-gallon drums to shoot up to six storeys into the air.

Herald Sun photographer Andrew Henshaw said he saw about half a dozen drums go “up in the air like rockets” in the space of 10 minutes.

“There was a distinct sort of popping noise … you could hear them over the sound of the helicopters and the sirens,” he said.

Chief fire officer Dan Stephens said crews found the 50m by 50m premises fully engulfed and there was a danger of collapse.

“Firefighters contained the fire to the premises but there has been some limited fire spread to the surrounding exposures,” he said.

“This is likely to be a protracted incident that will be ongoing for a number of days.”

Mr Stephens likened it to the toxic West Footscray fire last August, which took almost a day to control.

About 30 workers self evacuated before fire crews arrived.

One person was taken to hospital for an eye injury and another for burns, a WorkSafe spokesman said.

Damian Wells, Environmental Protection Agency executive director, said the factory contained highly flammable materials.

“It was poor form by the duty holder,” he said.

“We suspended this licence in late March, we inspected the premises and found three times the amount of material being stored on the premise than it was licensed to store,” he said.

Storage containers were also inadequately labelled and being handled outside an appropriate area.

The factory is allowed to hold a maximum 150,000 litres of material, including solvents, inks, paints and other flammable materials, before being processed.

Witnesses reported a number of explosions as the inferno spewed large volumes of black smoke, viewed as far as Clayton and Coldstream.

Boilermaker Alexander Powell, 28, who works next to the factory, heard the explosion through his earplugs.

“There was a large fireball probably about 40 storeys high,” he told AAP.

“I was wearing earplugs at the time, the noise was enormous, you could feel the heat bearing down on you, so we moved away.

“I was surprised the firefighters were so scared of it.”

A witness from the nearby suburb of Wollert, Dave, told 3AW radio he saw a “massive explosion that looked like a mushroom cloud”.

A factory worker, Pip, told the radio station he was watching the “enormous” fire from the next street.

“I’m at my factory and … in the next street there is a massive factory fire, I’m standing here watching it and there are still explosions happening. Flames 30 metres in the air, fireys coming from everywhere,” he said.

“The intensity of the fire is enormous, smoke going everywhere heading in the city direction.”

Mr Stephens said authorities were aware of the site and put in measures which reduced the fire’s impact.

“This incident today has been of far less impact than it might have been, had that work not taken place,” he added.

Nearby businesses were forced to evacuate and an advisory has been issued for Broadmeadows, Campbellfield, Coolaroo, Dallas and Somerton.

“There is currently no threat to the community, but you should continue to stay informed and monitor conditions,” fire authorities said.

Those sensitive to smoke are urged to close doors, windows and vents turn off heating and cooling systems.

EPA chief environmental scientist Andrea Hinwood said Merlynston creek had been contaminated.

- with staff writers and AAP