Air carrier ground personnel reported a passenger bag containing lithium batteries ignited during bag loading. The bag was removed and secured.

Narrative

Agent working in the bagroom; bag came down shute from sorter; agent said bag smelled of smoke; he put in cart by itself and then bag ignited with white thick smoke about 30 feet. He ran and got a manager who called fire department; fire department came to bagroom; removed bag and put on tarmac; opened up and inside contents were on fire. Extinguished bag. The route of this bag was local check in ZZZ to ZZZ1 - ZZZZ - ZZZZ1Bag room Crew Chief came to get me to tell me about a bag on fire at the bagroom. Got Person A and told him about bag fire and said; let's go. Lithium battery inside checked bag with cords (guitar player equipment).3 managers; Maintenance Operations Manager; two safety representatives (Person A and myself); fire department and city of ZZZ present. Passengers need to make sure there are NO Lithium Batteries in checked bags. This could have been much worse in the event the airplane was loaded with this bag. Thankful the bag fire started locally in the bag room and not on the 3 connecting flights from ZZZ.