Talk to Jorge the dwarf near the minecarts. He says that he has had enough of a dwarf named Marvin, they say he's been kidnapping other workers here and want's you to check it out. Accept then go down the rope to the living rock caverns and mine some concentrated coal, there should be a piece of ragged cloth, examine it then leave that area. Go back to the minecarts and give Jorge the rag, he will say it belongs to a worker called biff and he mysteriously went missing a few days ago.