The AWE, which maintains the UK’s nuclear warheads, must pay more than £280,000 after safety failings lead to an explosion.
The Health and Safety Executive (HSE) has said failings in safety procedures led to one member of staff being injured in a fire at the AWE's complex in Aldermaston, Berkshire, 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 had to be evacuated.
The company 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.
Former plant worker Ashley Emery, 29, from Basingstoke, 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.
After sentencing, 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.
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 £868.3m in 2012 and profits after tax of £11.3m, 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 AWE 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".