Iran plans major nuclear fuel expansion

The statement by Iran's nuclear agency chief Ali Akbar Salehi on Sunday evening came after President Mahmoud Ahmadinejad earlier in the day instructed him to start work on producing atomic fuel for a Tehran research reactor.

Iran's announcement raised the stakes in its dispute with the West, although analysts doubted Iran could launch 10 new plants in the near future since U.N. sanctions imposed on Tehran make it harder for it to obtain sophisticated components.

Analysts believe Tehran's announcement that it will start producing higher-refined uranium may be a negotiating tactic to prod the West into closing a fuel deal largely on Iranian terms.

But the move could also backfire if it only serves to make Western powers increasingly determined to push for more sanctions against Iran, the world's fifth-largest oil producer, over its refusal to suspend enrichment.

"Iran will set up 10 uranium enrichment centres next year," Iran's Arabic-language television station al Alam quoted Salehi as saying. The Iranian year starts on March 21. Iran mooted such a plan late last year but gave no time frame.

Ahmadinejad also said talks could still be revived on a nuclear fuel exchange offer by world powers designed to allay fears the Islamic Republic is trying to develop atomic bombs.

Salehi said Iran would start to raise the enrichment level from 3.5 percent to 20 percent on Tuesday, in the presence of inspectors from the International Atomic Energy Agency (IAEA).

He said Iran would formally notify the Vienna-based U.N. watchdog about the move in a letter on Monday, al Alam reported. He earlier said production would take place at the Natanz site.

But Salehi also suggested production would be halted if Iran could import fuel enriched to 20 percent, the degree of purity required for conversion into special fuel needed to run a Tehran nuclear medicine reactor, Iran's stated goal for the move.