Iran slow to markedly expand atom work-diplomats

VIENNA, Aug 26 (Reuters) Iran seems to have made little progress towards enriching uranium in significant amounts this summer but it is unclear whether technical problems or fear of stiffer UN sanctions lie behind the slowdown, diplomats say.

''It could be technical, it could be political, it could be both.

We need to understand the reasons,'' said a senior diplomat familiar with International Atomic Energy Agency inspections at the Islamic Republic's underground Natanz enrichment complex.

''But they are apparently still far away from (producing nuclear fuel in usable quantities),'' he said ahead of a detailed IAEA report on Iran due on Wednesday and which six world powers will scrutinise to guide any further moves on sanctions.

Coupled with the halting enrichment pace is a new Iranian pact with the IAEA to resolve, in phases lasting through the end of the year, questions about its nuclear activity that first raised Western suspicions about an illicit quest for atom bombs.

Still, Tehran has denied any enrichment hold-up. It insists work is progressing normally and ''non-stop'', rejecting IAEA calls for at least a halt to expansion beyond current activity to revive negotiations on a peaceful solution to the crisis.

Washington has said Iran's persistent refusal to suspend enrichment, and what it calls holes in Iran's transparency deal with the IAEA suggesting it will not be fulfilled, mean big powers will pursue consultations on tougher sanctions.

After installing centrifuges, machines that can enrich uranium for electricity or explosives, at what seemed breakneck pace this spring, Iran looked set to have 3,000 running in July -- enough to launch ''industrial scale'' output of nuclear fuel.

BELOW PRODUCTIVE CAPACITY But diplomats said Iran's enrichment capacity was still hovering in the region of 2,000 centrifuges, which are run in interlinked networks, known as ''cascades'', of 164 each.

Eighteen cascades could yield enough fuel for one bomb in about a year, if operated in unison at supersonic speed non-stop for long periods, and assuming that were Iran's objective. Tehran says it wants only nuclear-generated electricity.

But diplomats and analysts said Iran's ''feed rate'' -- the amount of uranium gas being injected into centrifuges for enrichment -- appeared to remain low, ''below capacity''.

One said this suggested Iran might not have a lot of confidence in the antiquated P-1 centrifuges, a 1970s technology, to withstand full-scale feeding.

The P-1s were prone to overheating, vibrating and even exploding in tests at a Natanz's above-ground pilot wing.

However, Iran says it is researching and developing a ''P-2'' centrifuge capable of enriching uranium 2-3 times as fast as the older model. Inspectors have no access to any P-2 sites and cannot rule out advances that might be unreported by Iran.

Because of uncertainty about whether Iran might harbour secret facilities separate from Natanz, although intelligence hasn't pointed to any, estimates of when Iran might get ''bomb capacity'' range from two to eight years.

''(Even if below capacity), cascades are still running at Natanz.

One cannot forget that. Only Iran knows what they are learning from the process,'' said the senior diplomat.

Iran appears to have installed about 16 of the 18 cascades which would constitute its first ''block'' of 3,000, diplomats said, but only about 12 of the cascades were being operated.

''Signs are that Iran is not moving forward in a significant way.

Each cascade has to put be put through very complicated tests,'' said David Albright, director of the Washington-based Institute for Science and International Security.

''But there could be political restraint in their plan, too, figuring they can gain some leverage internationally against US pressure (to turn so-far mild sanctions into biting ones).'' Iran's ultimate goal is to have 55,000 centrifuges in more than 300 cascades running in Natanz, a sprawling bunker protected by anti-aircraft batteries against feared US attack.

REUTERS KKB PM1434