Blacksmith Karrod is located in the Weapons and Armor Shop in Dark Elven Village. He learned how to handle adamantite, Damascus and is now studying Oriharukon. He obtained this knowledge from a Dwarven Warsmith named Roberto Steelbender who was enslaved by the Dark Elves for almost a century.
Steelbender had kept some of the secrets of crafting from Karrod however, as such knowledge is only passed on to other Dwarves. Karrod, would not accept this as an answer and put Steelbender on a torture device for 15 days and extracted the wanted information. The Dwarf could not stand the torture and died before divulging the secret of processing Orikarukon.
Karrod then, with the help of Cecktinon and Harne, captured the spirit of Steelbender with a Soul Catcher and stuffed it into the rotting head of a zombie. Even with this dark magic applied, the spirit of Steelbender will only last a few days and once the head decays, the spirit will escape.
"Elven craftsmen have great skill, without question, but they also tend to be stubborn and elitist. They won't even touch any other metal but mithril! Now, there's no question that mithril is an excellent material: very light, stronger than steel and possessed of a high affinity for magic.
But I refuse to be bound by foolish tradition, so I've been researching how to process various other materials. I've already learned the refining methods for Adamantite and Damascus, and I've recently begun studying the processing methods of Oriharukon"