Kobolds are creatures that thrive at the most remote parts of Northgard. They are an independent civilization which grew prosperous for thousands of years.
Kobolds occupy several tiles in Northgard, in the middle of which they built their village. As they are very greedy creatures, they often control very precious resources which they will defend with their lives!
You can choose to trade with the Kobolds and you'll see that they can represent very strong and lucrative allies. but sometimes, you'll just need this surplus of stone too much, and your only choice will be to wipe them out.
Rig and Halvard first encounter Kobolds in chapter 3, where the encounter surprised Halvard as sightings of these creatures are quite rare back in mainland. Halvard warned that kobolds can aggresively defend their territory while Rig wonders whether they willing to the trade with them.