EXCLUSIVE - Iran says nuclear fuel production goes "very well"

TEHRAN (Reuters) – Iran's newly launched 20 percent nuclear fuel production is going "very well", the Islamic Republic's Atomic Energy Organisation chief told Reuters in an interview on Thursday. Ali Akbar Salehi also said Iran had the capacity to enrich uranium up to a level of 100 percent -- above the level experts say is needed for a bomb -- but he said the country had no intention of refining the material to that level.

"There is no limit on enrichment. We can enrich up to 100 percent ... We have this capacity and capability. But we never had the intention and we do not have the intention to do so, unless we need (to)," Salehi said.

President Mahmoud Ahmadinejad said on Thursday Iran had produced its first consignment of 20 percent enriched uranium, two days after the Islamic state announced it had started making higher-grade atomic fuel at its Natanz enrichment plant.

Salehi said the production of 20 percent nuclear fuel would be limited to the needs of a Tehran medical reactor of around 1.5 kg per month.

U.S. President Barack Obama said on Tuesday the international community was moving "fairly quickly" toward imposing broader sanctions on Iran.

Obama said Iran's refusal to accept a U.N.-brokered atomic fuel swap agreement suggested it was intent on trying to build nuclear weapons, despite its insistence that its atomic activities were only for the peaceful generation of electricity.

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Iran had previously purified the fuel to just 3.5 percent, the level required for a nuclear power plant.

Western experts say the jump to 20 percent is a major technical leap towards enriching uranium to the 90 percent-plus that would be needed for a nuclear bomb.

The West accuses Iran of covertly trying to build nuclear bombs. Iran, the world's fifth-largest crude oil exporter, says its nuclear facilities are part of a peaceful energy programme and it would retaliate for any attack on them.

Salehi, echoing other Iranian officials, said sanctions would make Iran "more self-reliant and more self-sufficient".

Iran has said it planned to build 10 new uranium enrichment plants during the next Iranian year, starting in March, to produce enough fuel for its nuclear power plants.

Analysts say Iran will need many years if not decades for such a huge expansion of enrichment, but fear Iran's adherence to obsolete notification rules will heighten the risk of Tehran trying to "weaponise" enrichment clandestinely.

Uranium enrichment can be calibrated to yield fuel either for nuclear power plants or the fissile core of a nuclear bomb.

Salehi said Iran would have "good news" on improved nuclear enrichment centrifuges in coming months, adding the construction of new enrichment sites would start from March.

"Hopefully, in the upcoming Iranian year, we will be starting construction of one or two sites."

Iran has one enrichment plant in operation.

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