The goblins in the Orc-mines make use of a form of black fire to blast through the stone of the mine.
'There you are! Now, listen closely...I don't know exactly what evil they've cooked up this time, or how they did it, but these goblins are using some kind of strange black powder to aid their mining. When it catches fire, the stuff explodes, shattering rock into rubble -- and you, too, if you are standing too close.
'They store the powder in barrels, which I've seen mostly near the smelters. If you can sneak up and set fire to those barrels, you will likely catch the lot of them in the blast.'
Barrels of the goblins' black fire can be found near the smelters in the Orc-mines.
Ondor asked you to burn the goblins' explosive black powder.
Ondor the Dwarf is in the Orc-mines.
You should return to Ondor with news of your success.