Mime is hammering away at the anvil, trying to repair the sword that was smashed to pieces by Wotan in Act Two of "Die Walküre". He wants to make the bits into a strong sword, but every time he thinks he has managed it Siegfried picks up the sword and breaks it with his strength. The reason that Mime wants to make the sword is so that he can give it to Siegfried (who is obviously the hero who is meant to have the sword in the end) and tell him to fight the dragon. Then Mime will be able to get the ring from him so that he can have power over all the world. When Siegfried enters he brings a bear from the forest. The bear chases Mime and Siegfried laughs. Then he lets the bear go free. 