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I suppose doing a lot of trading with him will help get him up to tier III, I personally did it with silver bars.
Just be cautious, I don't know if silver is a limited material, since iron ore chunks apparently are limited... You may be able to buy silver ore from the blacksmith in later tiers, but I'm unsure.
Iron nodes are limited, ore chunks are not as far as I can tell, there is a spot you can farm in the mountain area above the swamp, like the blacksmith mentions, that to the best of my knowledge is limitless and I've harvested l 120 bars worth from the spot, you need a stoner cutter and ore stock pile but you can fix the blueprint bench up there and make a little mining camp.
That being said the best I can tell you get stuff like silver and gold from 2 stages, when you chip it out of the mountain and again when you break it down, but its a chance not a certainty, certain perks make it more often but I haven't gotten really tested em.
-_-