The explosion was reported at the Pirotecnia María Angustias company premises in Guadix, in the province of Granada in Andalucia.
The 112 Andalucia control centre warned people in the vicinity ‘not to be frightened’ as emergency services are on site.
First reports indicate that there were six people working at the site at the time of the explosion, around 6.30pm, and emergency services have confirmed two deaths and a third person missing.
A plume of black smoke is hanging over the site.
The Guardix town hall has released a statement confirming: “A strong explosion has been felt in practically the entire city of Guadix.”