Fire crews are still at the Rabbit Waste Management building in Chartwell Road and are expected to remain until Wednesday evening, the fire service spokesperson said.
There is still some extinguishing taking place, with one monitor and one jet being used.
Crews are also assisting site staff with the removal of 250 tonnes of wood pellets.
No injuries have been reported.
The first of more than twenty 999 calls was received at 1.15am yesterday morning (Sunday) with fire crews from Lancing and Shoreham initially mobilised.
The fire was in a large building containing more than 500 tonnes of wood chippings used for recycling.
The fire was attacked using ground monitors and jets with firefighters working hard to prevent the fire spreading to the rest of the building and plant room.
At its height the incident involved 10 fire engines with West Sussex crews supported by colleagues from East Sussex Fire & Rescue Service.
The smoke from the fire is not believed to be toxic.
A fire service spokesperson said, “Thanks to all the crews that attended for the way they tackled the fire to stop it spreading, and a special mention to our control operator colleagues for managing the busy mobilising and standby moves to help maintain fire cover across the county.”