Iran has been preparing extra equipment for enriching uranium to higher levels, a confidential U.N. nuclear watchdog report obtained by Reuters said, a move which may increase tensions with the West over its atomic work.
Tehran first started refining uranium to the higher level of 20 percent in February, saying it wanted to produce fuel for a medical research reactor after talks on a possible fuel supply agreement with big powers stalled.
Earlier this month Brazil and Turkey resurrected parts of the months-old proposal, under which Iran would ship 1.2 tonnes of its low-enriched uranium stockpile abroad in return for the fuel, seen as a way to reduce nuclear tensions with the West.
But the new International Atomic Energy Agency report showed Iran's low-enriched uranium stockpile had grown to 2.4 tonnes, meaning that if the 1.2 tonnes was shipped out now it would still leave it with enough material for a nuclear weapon if enriched to higher levels.
Iran says its nuclear work is for peaceful uses only. Yet, major world powers have recently backed a draft U.N. sanctions resolution against its atomic work.
"Based on this report Washington is going to feel justified in downplaying the Brazilian-Turkish-Iranian deal and focusing on sanctions instead," said David Albright, head of the Institute for Science and International Security.
Iran's move to escalate enrichment to the 20 percent level has raised Western suspicion because it takes the material closer to the 90 percent purity needed to make atomic weapons.
The Islamic Republic is also thought to lack the capability to make the special fuel assemblies needed for the medical research reactor.
The nine-page IAEA report showed Iran pushing ahead with higher enrichment. It has added a second set of 164 centrifuges -- nuclear enrichment machines -- to help refine the uranium but they were not yet operational.
At the time of the previous report in February, Iran had only one set of centrifuges installed for the work.
The Islamic Republic has told the agency that the extra machines will support the enrichment work by allowing material to be re-fed into the machines.
But analysts say they could be configured to expand the production, a move which would ring alarm bells in the West.
BETTER OVERSIGHT BUT LATE
Tehran has granted a months-old IAEA request to allow better oversight of the higher enrichment. The agency has said the measures should have been in place as soon as the work started to ensure the material was not being diverted for military uses.
Under a new agreement between Iran and the IAEA, inspectors have been able to improve camera angles, keep track of nuclear material and equipment by putting it under agency seal as well as conduct inspections at short notice.
"This is good enough for when the cascades are eventually interconnected," said a senior official familiar with the Iran investigation. "In this case the (inspections) regime is very tough."
But some said the changes paled in comparison with other issues.
"The fact that Iran allowed the IAEA to upgrade its safeguards approach for the 20 percent enrichment work is small comfort, given that Tehran continues to reject so many other IAEA requests necessary for proper application of safeguards," said Mark Fitzpatrick at London's International Institute for Strategic Studies.
"This latest report says Iran still refuses to answer questions about the Fordow plant, to provide access to heavy water-related facilities, to answer questions about the possible military dimensions and to provide advance design information."
Ali Asghar Soltanieh, Iran's envoy to the IAEA, took an opposing view and said the report proved his country was cooperating well with the agency.
"Certainly this report ... shows Iran has carried out its commitments regarding the Non-Proliferation Treaty and all of Iran's activities, including enrichment, are under the complete supervision of the Agency," he told Iran's ISNA news agency.
The report said Iran had slightly increased the number of centrifuges enriching uranium to lower levels at Natanz to 3,936, the first expansion in around a year. The number installed but not enriching had fallen slightly to 8,610.
Analysts said that the modest rise, after previous years of headlong expansion, suggested Iran could be concentrating its attention elsewhere. It also may be struggling to run large numbers of its 1970s-design centrifuges, which have been prone to breakdowns, they said.