Iran making nuclear fuel in underground plant: IAEA

By Mark Heinrich

VIENNA (Reuters) - Iran has begun making nuclear fuel in its underground uranium enrichment plant, the international atomic watchdog said on Wednesday, in a move by Tehran that raises the stakes in its showdown with world powers.

A confidential note by the International Atomic Energy Agency (IAEA) also said Iran had started up more than 1,300 centrifuge machines in an accelerating campaign to lay a basis for "industrial scale" enrichment in the Natanz complex.

Iran has been steadily upping the ante in a standoff with the U.N. Security Council, which has demanded an enrichment halt over suspicions that Tehran's declared civilian nuclear fuel project is a cover for mastering the means to build atom bombs.

Tehran says it seeks only nuclear-generated electricity. But its past concealment of sensitive enrichment research from the IAEA and continued stonewalling of the agency's inquiries have sapped confidence in its intentions.

Iran announced on April 9 that it had begun enriching in the Natanz hall, ramping up from a limited research operation above ground. But diplomats treated the disclosure skeptically pending confirmation from the Vienna-based IAEA.

To that end, the IAEA note said, agency inspectors visited the plant on April 15-16 and learned that 1,312 centrifuges, divided into eight cascades, or fuel-cycle networks, were operational and "some" uranium was being fed into them.

Iran has doubled the number of centrifuges in Natanz in the past two months and aims to have 3,000 running by end of May.

That could be enough to refine uranium for one bomb within a year, if Iran wanted to and if the machines ran for long periods without breakdown. Iran has yet to demonstrate such proficiency.

"...The quantity of UF6 (uranium feedstock) introduced at this time is small and the cascades are operating under low pressure, indicating that Iran is at an early stage of enrichment in the cascades," the Institute for Science and International Security, a Washington think-tank that tracks Iran's nuclear activity, said in reference to the IAEA note.

The three-paragraph document by IAEA deputy director Olli Heinonen also said Iran had stopped letting inspectors verify design work at the Arak heavy water reactor, under construction and scheduled for launching in 2009.

PROLIFERATION RISK

Major powers see the reactor as a nuclear proliferation risk as it could be used to produce plutonium for the core of nuclear bombs, although Iran says it has only peaceful purposes such as production of radio-isotopes for medical care.

Iran blocked IAEA access to Arak under its decision a few weeks ago to stop giving inspectors early design detail on future nuclear facilities. The move retaliated for a March U.N. resolution widening sanctions on Iran over its nuclear defiance.

Heinonen, whose note was addressed to Iran's IAEA envoy, said Tehran had agreed after prolonged negotiations to allow "a combination of unannounced inspections and containment and surveillance measures" to improve transparency at Natanz.

He urged Iran to honor the deal and to "reconsider" its withholding of further information about the Arak reactor.