TEHRAN (Reuters) - President Mahmoud Ahmadinejad is expected to announce Iran has mastered the final stage of nuclear fuel production when the Islamic state celebrates its National Nuclear Day on Thursday.
"I will have good nuclear news for the honoured Iranian nation tomorrow (April 9)," Ahmadinejad said on Wednesday in a televised speech at the central city of Isfahan.
Foreign nuclear analysts believe Tehran has yet to prove it has mastered industrial-scale enrichment of uranium, the key to making fuel in large, usable quantities and the most technically difficult aspect of churning out nuclear energy.
Tehran has slowly expanded its Natanz enrichment plant in defiance of U.N. resolutions demanding it stop over concerns Tehran's goal is atomic bombs, something it denies.
But analysts expected Ahmadinejad to say that Iran has perfected the last of several phases of fuel output.
"A possible announcement will be production of natural uranium pellets (in Isfahan) for Iran's Arak heavy water reactor and also production of fuel rods and assembling rods into bundles," said an analyst who asked not to be named, citing the issue's political sensitivities. "It is the final stage in a long process to produce nuclear fuel."
The nuclear fuel cycle includes mining and milling of uranium ore, uranium enrichment, fabrication and use of nuclear fuel, reprocessing of used fuel, and disposal or management of radioactive waste or unreprocessed spent fuel.
In a February 19 report, the International Atomic Energy Agency said it could not verify Iran's planned Arak heavy water reactor was being designed only for peaceful uses because Tehran had been denying visits by IAEA inspectors since August.
The report said Iran's fuel fabrication plant in Isfahan had begun producing fuel rods and that a process line for making uranium pellets was ready for operations.
Tehran says the Arak complex will be geared to making only isotopes for medical care and agriculture.
Western powers fear Iran may configure the Arak reactor to derive plutonium from spent fuel rods as another possible source of bomb-grade fuel, besides its Natanz uranium enrichment plant, which is under daily IAEA surveillance.
Iran's student news agency ISNA said, without giving a source, that Ahmadinejad would inaugurate the nuclear fuel manufacturing facility.
Nuclear energy chief Gholamreza Aghazadeh said in 2007 that Iran had produced and tested fuel pellets of enriched uranium.
Iran has long been working on its uranium enrichment capability to fuel its developing nuclear power programme.
The U.N. Security Council has so far issued three sanctions resolution against Tehran for defying its demand to suspend all activities related to enrichment and fuel reprocessing, which could also be turned to producing nuclear weapons.
Iran, the world's fourth largest oil exporter, says its nuclear programme is only aimed at generating electricity.
U.S. President Barack Obama is striving for a "new beginning" in bilateral ties with Iran and could play a role in mending bridges almost three decades after Washington severed all relations soon after Iran's 1979 Islamic revolution.
Iran has responded cautiously to the overture, saying Washington must show real policy change towards Iran. "If you (Obama) say you are after change ... change your method, change your literature and your way," Ahmadinejad said.
Additional reporting by Mark Heinrich; Editing by Dominic Evans