Iran expands nuclear fuel work-diplomats

VIENNA, Mar 24 (Reuters) Iran is rapidly expanding its controversial uranium enrichment programme, which Western countries fear Tehran intends to use to make nuclear weapons, diplomats said today.

Iran, which says it only wants to generate electricity, has set up a cascade of 164 centrifuges, machines that enrich uranium for use as fuel in bombs or power plants, at its Natanz site in central Iran, diplomats said.

''The 164 centrifuges are in place. There are pipes but no (nuclear) material has been fed into them,'' a diplomat close to the U.N. International Atomic Energy Agency (IAEA) said on condition of anonymity because of the sensitivity of the issue.

Several diplomats said it was not clear when Iran would start up the machines.

Last month Iran fed uranium hexafluoride gas -- the feed material that is enriched in centrifuges -- into one centrifuge and tested a cascade of 20 centrifuges.

Tehran's resumption of enrichment work in January angered the European Union's top powers, with whom it had agreed to suspend enrichment and other activities during talks aimed at convincing it to scrap enrichment for trade incentives.

The IAEA's governing board has referred Iran to the U.N. Security Council for failing to allay fears it wants atom bombs and Council members are seeking to agree on a statement telling it to re-suspend enrichment.

The number 164 is a significant step up from the previous 20 centrifuges and operation of such a cascade could eventually enable Tehran to better understand how a cascade works, diplomats and nuclear experts say.

It would take Iran many years to produce enough highly enriched uranium for an atomic bomb with such a small cascade. The U.N.

nuclear watchdog has said, however, that Iran intends to have 3,000 centrifuges installed at Natanz this year.

BUILDING BLOCK A cascade of that size composed of the type of centrifuges Iran has at Natanz could produce enough material for a warhead in a year, nuclear experts say.

''It's a clear sign that they have no intention of coming into line with what the board of governors asked for,'' said a diplomat from a state in the 'EU3' -- France, Britain and Germany -- that led talks with Iran.

The IAEA board has repeatedly said Iran should fully reinstate its suspension of enrichment-related activities.

Iran's planned pilot enrichment site at Natanz would be arranged in rows of 164 centrifuges.

''In a sense, this is assembling the building blocks for that pilot enrichment plant,'' the EU3 diplomat said.

''164 is more of a building block than 20. 20 is just research and development,'' he added.

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