A smouldering stone is a stone dropped by Cerberus and much more rarely, hellhounds. It can be used to upgrade the dragon axe, dragon harpoon, and dragon pickaxe into the infernal axe, infernal harpoon, and infernal pickaxe, respectively. These infernal tools have 5,000 charges and once fully depleted, they will function as their dragon variant. Another smouldering stone must be used to recharge it. At current Grand Exchange prices, one charge costs approximately 973.43 coins.
A player uses a smouldering stone to create an infernal tool.
Skills cannot be boosted to create infernal tools using the smouldering stone; the player must have the required base levels of either 85 Firemaking for the infernal axe, 85 Smithing for the infernal pickaxe, or 85 Cooking for the infernal harpoon. The conversion process is permanent, and the upgraded tools are untradeable.
The stone can be dropped by hellhounds as well, although at a much rarer rate. When dropped by a hellhound, a message will appear in the player's chatbox: "Something hot drops from the body of your vanquished foe."
For an exhaustive list of all known sources for this item, see here