Steel
From Cantr II Wiki
The material used for all of the best weapons and vehicles. Arguably the most valuable and sought after resource in Cantr. A society must be fairly developed to output significant amounts of steel, so don't be suprised if you don't come across any steel early in your character's life.
You will need a smelting furnace, and a pair of bellows. Use the smelter to start the steel smelting project. You will need the pair of bellows in your inventory while you smelt the steel. Propane is a more effective method, but not all places have it so they use coal instead.