Long Harbour Mayor Gary Keating speaks with CBC Monday as a fire burns on a hillside near his community. (CBC)

A wildfire burned more than a square kilometre of brush and forest near Long Harbour, N.L., on Monday, including an area where Vale Inco is preparing to build a nickel processing plant.

Provincial firefighting officials said on Tuesday the fire has been contained, but on Monday, residents of the community about 100 kilometres west of St. John's watched for hours as the fire raged through a hillside across the harbour from their homes, filling the town with smoke.

"Well, it was not a good experience, not an experience we would like to see repeated," said Long Harbour Mayor Gary Keating. "It could have devastating effects on the town.… The density of smoke was our biggest concern."

About 200 workers were forced to leave the area where the Vale Inco plant has been under construction since April.

Relying on water bombers after the heat and wind forced ground crews to stand back, firefighters stopped the blaze close to Vale Inco staff living quarters and some expensive equipment.

No one was injured and it's not clear yet when work can resume.

The fire appeared to be under control Monday evening but it flared up again overnight.

"We have 15 ground crew working on the fire," said Barry Garland, a provincial duty officer with the Newfoundland and Labrador provincial fire service.

He said a helicopter and water bomber that were being used to fight the fire were grounded by fog.

A heavy rain shower around midnight Monday appears to have helped to bring the flames under control, Keating said.

"I was looking at it at 4:30 this morning [Tuesday] and basically all I could see was just two patches of fire," said Keating.

Keating said the situation is a wake-up call as the town prepares to expand with the development of Vale Inco's processing plant.

"We need to have emergency measures in place to make sure that the town and the people who work here are protected," said Keating.

The cause of the fire hasn't been determined.

Mining giant Vale Inco began construction of the Long Harbour nickel processing facility despite the downturn in the world economy and lower nickel prices.

The plant is expected begin production in 2013 and will produce 50,000 tonnes of nickel annually.

Company officials say the plant will employ about 450 workers. The project will require 1,600 workers during its peak construction phase.