You need 3 ingredients =>
salt barrel from the kitchen in Citadel lvl 10
sulphur from the gay medic in Citadel lvl 9
Coal barrel from Fergus in the starting level.

then you do this, as described in the pic:

http://www.kiya1.de/beyond/act1screens/Act1explosivmix10.png

then you place your result into the forge.
Kiya