The Smelter Demon is an extremely tough, optional boss in Dark Souls 2. In the Crown of the Old Iron King DLC, you can face his even stronger cousin, the Blue Smelter Demon. He's optional as well, but if you journey through the Iron Passage, you'll find him ready to battle in the final chamber.
Good news, you can fight this guy the same way you fought his doppelgänger. Bad news, he does more damage--magic hits harder than fire. Magic-resistant armour and shields work well for this fight.
Most of his attacks are basic sword swipes: side to side, straight down, or a lunge. The first can be blocked with a shield, the second two are best avoided with a sidestep or dodge roll. When he leaps into the air to drive his sword into the ground, give him plenty of space to avoid damage. This is basic sword-wielding enemy strategy.
But things get tough when the Blue Smelter Demon powers up, adding magic damage to his sword. Use the same tactics, but be aware that magic damage will still chip away at your health if your armour doesn't have magic resistance. In addition, he'll follow up his leaping attack with a burst of energy around himself--keep your distance for a bit longer to avoid getting hit.
The regular Smelter Demon is difficult, so this fight will only be harder for most of you. Stick with it, bring phantoms if you need to, and watch his attacks to avoid getting magicked to death.
For more help be sure to check out our complete Dark Souls 2 Boss guide.