The Normal Chest to Iron Chest Upgrade is used to upgrade a normal single Chest into an Iron Chest. Simply right click any normal Chest with this item in your hand, and it will transform into a Iron Chest. If used on a double chest, the result is a single wooden chest with an iron chest beside it. Any items not fitting in the wooden chest will be moved to the iron chest.
Like all upgrades, this is used to increase the space of a chest without needing to empty and break the existing chest.
To compare all available upgrades, check Metal Chest Upgrades.