Overview: This is an updated, rewritten version of flayr's Nether Essence mod. The Nether Essence Mod adds Nether Essence, which is a new way to make gunpowder, a new fuel source, and make blocks that can be used for light. It also adds a way for you to recover items that have despawned.
Mod Content:
The Nether Essence Mod adds a new item and 2 new blocks. The item, Nether Essence, is the main point of the mod and its primary purpose is to craft gunpowder.
Nether Essence is crafted with 6 Netherrack, 2 Soul Sand and 1 Magma Block(Lava Bucket before 7.0.2).
4 Nether Essence can then be crafted with 4 Redstone dust and 1 piece of coal to make gunpowder. 
8 Nether Essence can also be crafted together to make a Nether Essence block, which acts as a source of light, although it is not as bright as Glowstone or torches it is still waterproof. 
For a stronger source of light, you can make a Radiant Nether Essence Block by adding a glowstone surrounded by nether essence. 
Alternatively both Nether Essence and Nether Essence Blocks can be used as a nether-found fuel source. Nether Essence can smelt 4 blocks and Nether Essence Blocks can smelt 32 blocks. 
Item Restoration Block(No picture available):
Once you place the Item Restoration Block, it will start to glow at some point, after items in the world have despawned. When it does, you can right click it to put it in active mode, and after some time, it will vanish, leaving some items that had previously despawned in its place.
Nether Essence is crafted with 6 Netherrack, 2 Soul Sand and 1 Magma Block(Lava Bucket before 7.0.2).
4 Nether Essence can then be crafted with 4 Redstone dust and 1 piece of coal to make gunpowder. 8 Nether Essence can also be crafted together to make a Nether Essence block, which acts as a source of light, although it is not as bright as Glowstone or torches it is still waterproof. For a stronger source of light, you can make a Radiant Nether Essence Block by adding a glowstone surrounded by nether essence. Alternatively both Nether Essence and Nether Essence Blocks can be used as a nether-found fuel source. Nether Essence can smelt 4 blocks and Nether Essence Blocks can smelt 32 blocks. Item Restoration Block(No picture available):
Once you place the Item Restoration Block, it will start to glow at some point, after items in the world have despawned. When it does, you can right click it to put it in active mode, and after some time, it will vanish, leaving some items that had previously despawned in its place.
Contact
Feel free to contact me with feature requests, and general questions about the mod.
If you have a bug or crash to report, please use the issue tracker. If it is anything else, here are other ways to contact me.
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Can you add a Nether Furnace, please?
In reply to knochi_xd:
What differences would there be between that and a regular furnace?
In reply to The_Fireplace:
faster 25% and use less 50 % fuel
In reply to superchuck3396:
that would be very overpowered
In reply to EnerjiSA:
CORRECT
This mod looks great, hope it will be updating to 1.12.x?
In reply to carstorm:
Hi The_Fireplace!
I created a mod showcase on this mod! Nether Essence is so simple, yet so great. Fantastic work!
In reply to ALECISGrAY:
Looks useful enough, though you might want to replace the water with lava. You know, make it possible to actually get the stuff using only nether-based materials.
You're right, I should probably do that. Currently it is just using the recipes flayr came up with. Thanks for the feedback.
Awesome idea, I'll have to add this to my list of mods to test for 1.8!