A freight train carrying diesel has derailed and burst into flames, with fuel spilling into a nearby river.
About 300 people were evacuated from their homes in Llangennech, near Llanelli in Carmarthenshire, during the "major incident" on Wednesday night.
Natural Resources Wales said it was not safe to try and contain a diesel spill which had gone into the River Loughor.
A driver and engineer, onboard the train, were not injured and are being supported, owners DB Cargo UK said.
Dyfed-Powys Police said the driver had noticed something was wrong with the train, which was travelling from Milford Haven. It then derailed and the fire started.
The blaze, which was still burning Thursday evening, was reported at about 23:20 BST on Wednesday and police said it had been declared a "major incident" due to the "initial risk of harm" to people nearby.
People living within 800m of the fire described seeing "plumes of smoke" and seeing flames from the tracks, when they were evacuated from their homes. They have since been allowed back.
The Rail Accident Investigation Branch (RAIB) said it was carrying out a preliminary examination and gathering evidence.
