Solvay Solutions UK did not properly check a 'safety critical' piece of equipment that broke in a 'catastrophic' failure and was hit with a £333,000 fine with £110,000 costs at Wolverhampton Crown Court.
A ground-hugging white haze – heavier than air and hazardous to health – billowed from its factory in Trinity Street, Oldbury, which 20,000 people live within 2,000 meters of.
Those enveloped in the mist found it difficult to breath and were left with streaming eyes and an irritated nose, the court heard.
Police toured the area warning people to stay indoors because phosphoric acid is corrosive and can cause burns.
A supermarket was forced to shut and streets – including a slip road to the M5 – were closed.
"It was an alarming experience and produced physical effects but not long-lasting effects," said Mr James Puzey, prosecuting.
But he added: "Somebody in the immediate vicinity could have suffered very serious injury or may even have been killed. Solvay fell far short of the expected standard of safety."
Only 15 of the 250 strong workforce were on duty at the chemical plant when disaster struck at midday on January 2, 2009 because it was a public holiday.
A 3ft long ball of flame flared from a phosphine converter when the 15-month-old metal bar known as a 'rodder' broke, explained Mr Puzey.
A valve was jammed open by the blast allowing extremely flammable phosphine gas to leak and combine with air to create phosphoric acid.
The phosphorous feed was switched off but chemicals already in the converter continued to react and the leak could not be plugged for 90 minutes by which time 564 kilos of phosphoric acid had been released, the court heard.
Solvay Solutions whose UK operations had a turnover of £110 million in 2014 had not appreciated that the 'rodder' was a 'safety critical' feature of the production process, concluded the prosecutor. It was only checked visually for corrosion and wear and tear.
Mr Stephen Hockman QC, defending, conceded: "We cannot be certain what the problem was but such a failure leading to complete fracture of the 'rodder' in use had not been foreseen.
"This is a very reputable organisation that has never been in front of any court before. It is very sorry and has done its best to make amends."
The firm pleaded guilty to failing to ensure the health and safety of employees and others not in their employment.