The Normal Chest to Copper Chest upgrade is used to transform a vanilla Chest into a Copper Chest. This is done so by right clicking the desired chest while holding this item. Upon right click, the upgrade will disappear from your inventory and the Chest will become a Copper Chest.
Like all upgrades, this is used to increase the space of a chest without needing to empty and break a chest.
To compare all available upgrades, check Metal Chest Upgrades.