Iran says has enriched uranium

TEHRAN - Iran said on Tuesday it had produced low-grade enriched uranium suitable for power stations and wanted to achieve industrial-scale production, setting itself on a collision course with the West.

The United Nations has said Iran must halt uranium enrichment, a process Western nations fear Tehran wants to master so that it can develop nuclear weapons. Tehran insists its aims are entirely peaceful.

The United States, which has been leading the charge against Iran, said Tehran was "moving in the wrong direction" with its nuclear programme and if it persisted, Washington would discuss possible next steps with the UN Security Council.

"I am officially announcing that Iran has joined the group of those countries which have nuclear technology. This is the result of the Iranian nation's resistance," Iranian President Mahmoud Ahmadinejad said in a televised address.

"Based on international regulations, we will continue our path until we achieve production of industrial-scale enrichment," he told officials and some ambassadors from regional states gathered in the northeastern city of Mashhad.

Iran's Atomic Energy Organisation head said earlier that Iran had enriched uranium to a level used in power plants, a major step forward in the country's nuclear programme.

"I am proud to announce that we have started enriching uranium to the 3.5 per cent level," Gholamreza Aghazadeh said, adding that the pilot enrichment plant in Natanz, south of Tehran, was now working.

Iran's announcement is a serious setback to UN Security Council efforts to have Tehran halt enrichment work and it could escalate a confrontation with Western powers leading to consideration of sanctions against the Islamic Republic.

White House spokesman Scott McClellan said Washington would "be talking about the way forward with the other members of the Security Council and Germany about how to address this" if Iran continued to move in its current direction.

The UN Security Council has demanded Iran shelve enrichment activity and on March 29 asked the International Atomic Energy Agency to report on its compliance in 30 days.

IAEA chief Mohamed ElBaradei is expected to visit Iran later this week to seek full Iranian cooperation with the Council and IAEA inquiries. The announcement of advances in enrichment work casts an embarrassing cloud over that trip.

The IAEA had no immediate comment.

Iran, the world's fourth largest oil exporter, has one nuclear power plant that is under construction but has plans for more. It says it needs to make its own nuclear fuel to secure supply and has rejected UN demands to stop enrichment.

The high-profile announcement about Iran's nuclear achievements when tensions with the West are already high, puzzled some analysts. But they said it could be grandstanding ahead of a possible softer approach to follow.

"They can say, 'we reached our rights, we reached our goals and it is not necessary to continue any more because we are able to do the job.' This is my guess," political analyst Saeed Laylaz said.

A Western diplomat said it was possible Iran was "putting on this drama to step back", but said this was still speculation. "It's totally the wrong signal," the diplomat added.

Reflecting anxiety about the nuclear dispute, investors shifted into the safe-haven Swiss franc after Iran's announcement, traders said. The nuclear dispute has also been a factor helping to push up oil prices to record levels.

The president had flagged on Monday that what he called "good news" about Iran's nuclear programme was on the way.

Shortly before Ahmadinejad spoke on Tuesday, influential former Iranian President Akbar Hashemi Rafsanjani had said in comments to Kuwait's news agency KUNA that Iran was producing enriched uranium from a cascade of 164 centrifuges.

Iran was referred by the IAEA to the Council in February for failing to convince much of the international community that its nuclear work aims to generate only electricity, not weaponry.

The level of enrichment needed to trigger the nuclear chain reaction that detonates bombs is far higher than the 3.5 per cent Iran says it reached. But even word that low-level enrichment is under way will be unacceptable to Western powers, diplomats say.

It would take Iran years to yield enough highly enriched uranium for one bomb with such a small cascade. But Iran has told the IAEA it will start installing 3,000 centrifuges later this year, enough to produce material for a warhead in a year.

Washington has said repeatedly it wants to resolve the nuclear stand-off by diplomatic means. But analysts say advances in uranium enrichment technology by Iran may be the tripwire for the United States or Israel to take military action.

President George W. Bush on Monday dismissed reports of plans for military strikes on Iran as "wild speculation".

- REUTERS