The time comes when even the best blacksmith will come upon an item that
he can do nothing with, or may find he badly needs a certain material in
order to finish a vital repair. In times like this, he can take almost
any item and melt it down, or form it into a reworkable mass. This way
he may not have to go find raw material himself, he can just get by with
what he has on hand. You will need appropriate tools and possibly a forge
in order to work the materials.
To ensure you don't cannibalize wrong item, place the item in keep.