Billy Fairweather, aged 35, was killed after being struck in the chest by an alloy at high speed at Abbey Forged Products in Beeley Wood Lane, Oughtibridge, in July 2015.
The firm was fined Â£500, 000 and ordered to pay about Â£23,000 in costs after admitting a health and safety breach during a hearing at Sheffield Crown Court.
Carol Downes, an inspector for the Heath and Safety Executive, which investigated the incident, said after the case: "This tragic incident could easily have been prevented if the employer had acted to identify and manage the risks involved, put a safe system of work in place, and to ensure that the job was allocated to the appropriate equipment.
“Companies should be aware that HSE will not hesitate to take appropriate enforcement action against those that fall below the required standards.”
The court heard Mr Fairweather was part of a four-man crew engaged in producing metal parts from alloy cylinders weighing around 20kg.
The alloy was particularly resilient and it was decided that the 50cwt pressurised hammer would be used in the process - the heaviest hammer available to the crew.
Mr Fairweather was acting as the first man in the crew and it was his job to move the alloy on the anvil using tongs between hammer strikes until it was forged into the desired shape.
Due to the small size of the workpiece and the large size of the hammer, it was necessary for him to be positioned low down on one knee and close to the hammer.
The incident happened when the hammer was brought down when the alloy was not properly seated on the anvil, striking it with a glancing blow rather than a direct impact.
The HSE said this caused the alloy piece to be ejected from the anvil at great speed, striking Mr Fairweather in the chest causing "massive injuries, from which he sadly died."
An investigation by the HSE found the company had failed to allocate the job to the correct hammer and crew, and failed to properly assess the risks involved with hammering small components on large hammers.
The probe also found the company failed to provide a safe system of work that considered communication and which allowed line of sight of the work piece.
The company pleaded guilty to breaching Section 2(1) of the Health and Safety at Work Act 1974.
Managing director Jackie Neal said: "This company has always held the protection and safety of our employees as sacrosanct, and we have done all we thought possible to avoid any accident.
"We would have done anything and everything to change the outcome of that day, and the trauma and pain, will not be forgotten."
She added that Billy "achieved great things during the course of his employment" and described the firm as a "family business" which he was a part of.