When searched, the quest chat will notify: You search the lava furnace. You find a small compartment that you may be able to use. Strangely, it looks as if it is designed for a specific purpose... to fuse things together at very high temperatures... When a crystal piece is used on the furnace: You carefully place the piece of crystal into a specially shaped compartment in the furnace. The compartment in the furnace isn't full yet. It looks like you need more pieces of crystal. On the final crystal piece: Using all three pieces on the furnace produces the red crystal.