IAEA says Iran making nuclear fuel underground

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 sceptically 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.