Jamil Ahmad, a worker of the Haideri Steel Factory, said the fire erupted when an oil tanker placed outside the factory building exploded.
The tanker was used to store oil for the factory generator, he added.
One of the workers immediately called rescue teams and police, who reached the incident site and doused the fire.
Five killed as fire engulfs makeshift huts in Karachi
DSP Barki police station Talib Hussain confirmed the death toll.
The bodies and injured were shifted to Gurki Hospital.
Four of the deceased workers were identified as Imran, Muhammad Ashfaq, Sagar and Imran.
Meanwhile, Punjab Chief Minister Shahbaz Sharif took notice of the incident, and expressed sorrow over the loss of lives.
وزیراعلی پنجاب محمد شہباز شریف کا گھرکی ہسپتال کے قریب آئل ڈپو میں آتش زدگی کے واقعہ کانوٹس۔
— Punjab 2013-18 (@Punjab13to18) November 9, 2015
وزیراعلی کا آتشزدگی کے باعث 5افراد کے جاں بحق ہونے کے واقعہ پر افسوس کا اظہار۔
— Punjab 2013-18 (@Punjab13to18) November 9, 2015
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