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Clay is harvested from clay blocks, which can be naturally found on the bottom of rivers and lakes in shallow, diamond-shaped patches, disregarding adjacency to other types of blocks.
Like vanilla clay, red clay is harvested from red clay blocks. Red clay blocks can be found underground in the Far Harad Grasslands similar to veins of dirt or gravel. When mined, red clay blocks will drop four red clay balls.
Both normal and red clay balls can be crafted back into block form.