The Atomic Weapons Establishment, which makes and maintains warheads for the UK's Trident nuclear deterrent, has been ordered to pay more than £280,000 for putting employees at a site in Berkshire at risk, the Health and Safety Executive has said.
Failings in safety procedures led to one member of staff being injured in a fire at the complex in Aldermaston on August 3, 2010.
There were no radiological implications as the blaze broke out in a part of the plant which deals with conventional explosives but residents nearby were evacuated.
The Atomic Weapons Establishment's (AWE) was fined £200,000 and ordered to pay £80,258 in costs at Reading Crown Court after it admitted a single count of breaching safety law on May 16.
One former plant worker, who suffered burns to his left arm and face in the incident, will receive £2,500 in compensation. He was producing a highly flammable lacquer while surrounded by other explosive materials and wearing "inadequate" personal protection gear when he was engulfed by the fireball, thought to have been caused by electrostatic discharge.
Health and Safety Executive (HSE) inspector Dave Norman said: "The fire could have caused multiple casualties and it was entirely preventable had better control systems been in place.
"The failure to instigate such controls was dependent on AWE identifying potential hazards and risks, all of which were well documented, but that simply did not happen.
Mr Norman said that the "collection of shortcomings" demonstrated by the company showed there had been failures of "supervision, monitoring and auditing over time".
"Companies working with hazardous substances must take extreme care at all times and in all aspects of their operations," he added.
Dr Graeme Nicholson, Director Science, Technology and Production from AWE, said: “AWE always takes its health and safety responsibilities extremely seriously. We accept that on 3 August 2010, we did not meet our usually high standards. We regret the occurrence of the fire. We are sorry that a member of our staff was injured and for the disruption caused to local residents.
“Lessons have been learnt and we remain committed to achieving the highest standards in safety performance. We will continue to work openly and collaboratively with all our regulators.”
AWE is owned by a consortium of the Jacobs Engineering Group, Lockheed Martin UK and Serco, but the Government has a "golden share" and is the proprietor of the site where the fire broke out.
It has more than 4,000 employees currently working at the Aldermaston plant, with turnover of £868.3 million in 2012 and profits after tax of £11.3 million, the court heard.
Production at one of the site's buildings was suspended in January this year over separate safety concerns following a routine inspection.
Peter Burt, of the Reading-based Nuclear Information Service, a not for profit organisation which monitors AWE, said that lessons should be learnt before the company could draw a line under the incident.
"Arrangements for allowing local communities to scrutinise and question safety arrangements at the Atomic Weapons Establishment need root and branch reform," Mr Burt said.
"Rather than limiting discussions on safety to a cosy group of AWE's chums from local councils, a proper community liaison group needs to be set up which is open to the media and public and includes representatives from local community groups and environmental groups - including AWE's critics.
"Whether AWE likes it or not, it's a fact that incidents like the 2010 fire are bound to shake trust in the company.
"The way for AWE to restore that trust is not to carry on pretending that nothing has happened, but to turn over a new leaf of openness, honesty, and engagement with local communities".