The fire lobster was introduced to Hogwarts students by Headmaster Kobus Hendrik in Care of Magical Creatures class during Term 8. Additional information can be found in What Lies Beneath by P.H. Athoms.
According to Hendrik, the creature was found by Muggles who did not realize what they had found. Although he rushed to take possession of it, the creature did not survive. The fire lobster is seldom seen on the ocean's surface due to the fact that its primary habitat is volcanic vents on the ocean floor. These creatures prefer to stay buried in volcanic magma if possible.
Although the picture shows a pale fire lobster, typically this creature is a bright red color and glows like a lit ember. When the creature travels to the surface to lay its eggs, the creature will fade from red to the pale neutral color seen.
Fire lobster eggs are a Class-A nontradeable good and are often sold on the black market in Sri Lanka. The eggs can be cooled using a freezing charm and are very useful in a variety of potions, although many of them are very dark and considered deadly. The primary potion the eggs are used in is the dangerous Maut Potion, one used for years to kill high ranking officials in the Indian Ministry of Magic. The potion was especially dangerous because it could be dried and used as an airborn instantaneous poison. Brewing the Maut Potion is illegal and akin to the Killing Curse.