Firefighters are continuing to battle a machinery blaze in a mulching facility near Mount Gambier which has caused an estimated $350,000 damage.

The fire started in machinery at the Wandilo site, with crews called to the facility just before 5pm.

Thirty five CFS volunteers on five trucks and a bulk water carrier were supported in the air by observational and fire bombing aircraft along with ground crews from ForestrySA.

The crews are still working to extinguish the machinery fire, which has spread to nearby bark mulch.

The firefighters are working with excavators and loaders onsite to extinguish the fire.

Crews are expected to remain onsite for several hours.