In ancient times, the keeper Mimiron had discovered kaja'mite and, attempting to determinate its properties, he experimented on various races. He found that the ore was extremely potent and that it increased the intellect of his subjects. One of these subjects was a small primitive life race that roamed around the forests near Ulduar. By consuming kaja'mite, they were transformed into a new, highly intelligent race known as the goblins.
Early in their history, the goblins were forced to mine it by the Zandalari who came to Kezan, desiring the mineral for their complex rituals. However, its magic gave them great intelligence and the goblins overthrew the trolls around a hundred years before the opening of the Dark Portal. Eventually, however, kaja'mite supplies ran low, and as the golbins' intelligence dwindled, their inventions became increasingly unreliable. As a result, the goblins turned to mercantilism as a source of income and transformed Kezan into a profitable trading hub after years of cartel wars.
This section concerns content exclusive to Cataclysm.
A kaja'mite mine is located on the Lost Isles and is mined by a group of intelligent monkeys. Some of the monkeys have been enslaved by mysterious Pygmy. By goblin law, all Kaja'mite belongs to goblins.
After the goblins reach Azshara, Kaja'mite is no longer a plot point. Although the lack of mention of Kaja'mite after the goblin starting experience could illustrate the short supply status of the substance.
In the RPG
Kaja'mite is a strange ore with magical powers that is named after Mount Kajaro. The goblin's capital city of Undermine was likely declared so because it was the mine that contained the vital kaja'mite. The goblins searched fruitlessly for more deposits of kaja'mite all over the world for thousands of years. Goblin intelligence peaked about 500 years before the First War, and has been declining ever since.