A Plague Upon Thee

Now that we have the termites, take this steel reinforced barrel to the Northridge Lumber Mill south of Hearthglen--you'll find it to the west of the road that leads you up to the town.

Once there, place the barrel in the center of the lumber mill; find someplace suitable, like on a crate and then open it. The termites should do their work from there and make the mill useless to the Crusade.