North Korea says has made more arms-grade plutonium

By Jon Herskovitz and Yoo Choonsik

SEOUL (Reuters) - North Korea said on Tuesday it had completed reprocessing spent fuel rods at its Yongbyon nuclear plant and turned it into arms-grade plutonium, giving the mercurial state more material to produce atomic arms.

The announcement comes after the reclusive North, hit with fresh U.N. sanctions to punish it for a nuclear test in May, has warmed up to the outside world in recent months and indicated it could return to stalled international nuclear talks.

"We have finished reprocessing 8,000 spent fuel rods as of August. We have made substantial achievements in weaponizing plutonium from the extraction," North Korea's official KCNA news agency said.

Washington offered a muted response. State Department spokesman Ian Kelly declined to condemn the action but noted that "reprocessing plutonium is contrary to North Korea's own commitments ... and also would be a violation of various U.N. Security Council resolutions."

"I didn't say we were condemning it," Kelly said when asked about the issue at a briefing. "I was saying that they should start taking steps toward the denuclearization of the Korean peninsula."

Experts said the North might be able to produce enough material for at least one more atomic weapon from the spent fuel rods at its Soviet-era Yongbyon plant, which was being taken apart under a sputtering, six-way disarmament-for-aid deal.

The North already had enough fissile material for about six to eight nuclear weapons, experts said.

"They (North Korea) are just telling us that they are biding their time and increasing pressure on the United States ahead of bilateral talks," said Yang Moo-jin, a professor at the South's University of North Korean Studies.

The North called on Monday for direct talks with its long-time foe, the United States, and gave the clearest signal so far it was ready to return to nuclear disarmament talks it has boycotted for almost a year.

That followed last week's rare visit by a North Korean official to the United States and what has been a "charm" offensive by the ostracized state that some analysts say is looking increasingly desperate for finance and aid.

Kelly said the United States was willing to talk to North Korea bilaterally within the context of the six-party talks but had not yet made a decision on when and where, in part because many of the officials involved have been traveling.

"We will make a decision. We're just not at that point right now," he said.

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The sanctions following the nuclear test were aimed at cutting off the cash the North receives from its arms sales. Some estimates say those account for more than $1 billion a year in a state with a $17 billion annual economy.

"The sanctions caused the North to drop its hard-line policy but we have not seen any indications yet that Pyongyang has made a strategic decision to change its nuclear arms policy," said a diplomatic source in Seoul.