Fire and Rescue NSW crews were called to the feed mill on Nelson Road just after 10am on Saturday, with up to 50 firefighters now working alongside engineers to extinguish the fire.
Zone commander for the Lower Hunter, James Manuao, said crews responded to an automatic fire alarm and found four people on site, who were moved to safety.
"We located a small fire at the top of the dust extraction system," Mr Manuao said. "Due to good work from our firies, they've managed to get onto that fast, they've attacked that and doused that fire."
However, concerns remain about heat travelling down through the ducting system to where the grain grinder is located. The original fire reached temperatures above 200 degrees Celsius, while the temperature near the grinder, which crews had not yet reached, was about 500 degrees Celsius.
"We are concerned there is fire still propagating down the bottom. We are slowly working our way through this, we are maintaining our safety, we've got exclusion zones in place, we will have this under control in a few hours," Mr Manuao said.
Crews are being regularly rotated to manage welfare during what Mr Manuao described as "a long and arduous job."
All stormwater drains in the area have been shut off to prevent runoff, and the Environmental Protection Authority is being kept informed. Firefighters believe the blaze has not spread to other silos on the site.
Mr Manuao said it was too early to determine how the fire started.