Another case of a "bad connection/contact" Probably started at the load lug. Second guess is metal fatigue at the load side fuse clips, causing 'heating scenario. Solution, new disconnect, fuses, and possibly replace the load wiring. That is: after determining the load info. BTW: 480 volt??? John
jdev — The center fuse has a universal "rejection" notch included with all NEC/UL class-R ferrule fuses. These days, it's just about impossible to find replacement fuses without that feature, and class-R fuses are, in most all cases, considered an acceptable replacement for class-H and class-K fuses.
Had this happen in a 400 amp disconnect on a 208 volt service to a 7-11 (convenience store). The fuse clip, wire lug, and about two inches of 500 kcmil copper all melted into a puddle in the bottom of the can, along with a pile of sand. The fusible element was 100% intact.
Cubby: Sounds like a fuse fail at the link to ferrule joint/connection. Gets hot as hell from the arcing (internal) heats the spring clips, deteriorates them eventually, then the wire/lug heat & deteriorate and poof...a meltdown. An IR scanner (cheap ones available now) shows most hot spots, and is a good investment isf you can get the clients to do it.
BTW, Bussman may be interested in the "failed" fuse if you have it. I have a Bussman Fuseologist around here, and he loves to get burnouts for his lab. John