Obsidian shards, needed to make Obsidian bars, are dropped by TokHaar in the TokHaar Fight Cauldron. You smelt them at a furnace to create obsidian bars. Smelting an obsidian bar requires 80 Smithing.
Obsidian bars can be used at any anvil to create obsidian armour through the Smithing interface.
Obsidian armour has a 50% chance of degrading with each hit they absorb whilst inside TzHaar areas. The armour pieces have 4000 charges.
In the Fight Cauldron entryway, there is a coffer where you can donate a large quantity of TokKul. As a reward for your generosity, the damage reduction of their obsidian armour will be buffed for a period of time. When under the effects of the buff, the chance that your armour will degrade is reduced to 20%. You must be wearing at least one piece of obsidian armour to gain this benefit. You can donate more TokKul to increase the duration of the buff (up to 60 minutes) but the potency of the buff will remain the same. 15, 000 TokKul will add 20 minutes to the buff.
Obsidian armour can be repaired by using 100 obsidian shards on the item. The cost is 100 shards, regardless of the amount of damage the armour piece has. Right-clicking a stack of shards will show a Repair option which will repair all items that it can, starting with the item with the least charges until either all worn pieces are fully charged or the you run out of shards.
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