Is… is there some reason that an entirely aquatic species can’t simply do their metalworking above the surface? I mean, sea creatures interact with the surface world all the time. An intelligent race would be curious about the environment and would learn to exploit it to some degree. Not so unreasonable that they would learn about fire.
They could just set up an operation on a beach and smelt to their heart’s content. It would be a hostile environment, sure, but not so different from pearl-diving, which has taken place for thousands of years.
(Ooh! Maybe they could even dig out artificial lakes on land, with some kind of overland transport, so that enemies would not be able to cross the ‘moat’. I would love to have a secret smelting operation there!)