Red Dust was an Interplanetary Strategic Alliance nuclear weapon, developed by Evelyn Batton on Vekta. When the Helghast invaded Vekta, General Metrac captured the weapon. During the retreat of the Helghast from Vekta, the weapon was taken back with them to Helghan. However, the Helghast were not able to secure the codes needed to detonate the device.
During the ISA invasion of Helghan, Batton mentioned that the capture of the weapon was important. Colonel Mael Radec attempted to extract the code from Batton following her capture in the wastes, but was unable to do so. An attack on the ISA cruisers hovering over Pyrrhus followed, where Radec was able to secure the codes during the assault on the New Sun. Shortly afterwards, the weapon was detonated in the city destroying all of the ISA and Helghast forces fighting there, and severely weakening the ISA's hold on the planet.
Interestingly, while the weapon does, in fact, generate radioactive fallout (as demonstrated by the existence of the irradiated Petrusite) none of the ISA troops fighting in and around the ruins of Pyrrhus seem to experience any radiation sickness or any other complications from the device's detonation. This was explained in Killzone: Mercenary, where Blackjack explained that massive amounts of radiation medicine were bought by the ISA, and Helghast have a natural immunity to radiation. This explains the radiation however the nuclear weapon still had a very short half life between the initial detonation and the ISA retreat. This nuclear device was designed with the intent of using it to remove the Helghast army from southern Vekta, so it was likely designed to have a minimal long term gamma radiation fall out on an intended target.