The BBC Rhonetal was docked at Port Hedland when the fire was sparked in the lower cargo hold as the crew used a plasma torch to cut welded sea fastenings in March 2021, an Australian Transport Safety Bureau investigation found.
The incident was the tenth in just 14 years on a ship owned by German parent company Briese Schiffahrts and the fourth probed by the ATSB.
The fire was only extinguished by Port Hedland fire crews three days later.
Firefighting personnel were then forced into COVID-19 isolation under Western Australia's pandemic laws.
"The ATSB's investigation found the risk of fire had not been adequately assessed by the crew prior to the commencement of the hot work," ATSB Chief Commissioner Angus Mitchell said.
The report found BBC Rhonetal's managers had not effectively implemented the shipboard safety management system procedures to prevent the fire.
"The continuing incidence of fires on the cargo holds of ships while performing hot work highlights the importance of adhering to shipboard procedures and recognised safe work guidelines for hot work," Mr Mitchell said.
The ATSB has issued safety recommendations to the ship's management company, and its parent company, to implement proposed safety action across their fleets.
The ship is flagged in the small Caribbean nation of Antigua and Barbuda.
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