Iran meeting nuclear commitments, but key plant not ready

By Fredrik Dahl VIENNA (Reuters) - Iran is meeting its commitments under a landmark nuclear pact with world powers but has yet to complete a facility it will need to fulfill the six-month deal, a U.N. agency report showed on Thursday. The planned plant is designed to convert low-enriched uranium gas (LEU) into a less proliferation-sensitive oxide form. The apparent construction delay means Iran's LEU stockpile is almost certainly continuing to increase for the time being, as its production of the material has not stopped. The confidential report - a monthly update on the interim deal's implementation - by the International Atomic Energy Agency to member states said Iran, in a letter on Monday, had informed the IAEA that the conversion facility would begin operations after commissioning due to start on April 9. The IAEA has a pivotal role in verifying that Iran is living up to its part of the accord that took effect two months ago, under which the country suspended its higher-grade uranium enrichment and agreed other measures to curb its nuclear program in exchange for limited sanctions easing. Among other steps, Iran agreed to limit its LEU reserve. The new plant is meant to achieve that by turning it into oxide powder that is not suitable for further processing into highly-enriched bomb-grade uranium. Iran denies any military aims. Diplomats and experts say the matter is of no immediate concern since Iran's commitment concerns the size of the stockpile towards the end of the deal, in late July, meaning it has time both to complete the site and convert enough LEU. But they also say Iran's progress in building the conversion line will be closely watched as part of the implementation of its obligations under the accord reached in November with the United States, France, Russia, Germany, Britain and China. The longer it takes to complete it, the more Iran will have to process to meet the target in four months' time. The deal was designed to buy time for negotiations on a final settlement of the decade-old dispute over nuclear activity that Tehran says is peaceful but the West fears may be aimed at developing an atomic arms capability. Those talks started last month and a second round was held this week. "Iran seems to be fulfilling all its requirements under the agreement," one Vienna-based diplomat said. "However, this is a dynamic process and it will be kept under close review each month." HIGHER-GRADE NUCLEAR STOCKPILE DOWN While Iran under the half-year deal halted its most sensitive nuclear activity, enrichment to a fissile concentration of 20 percent, it is allowed to continue producing uranium refined up to 5 percent. The powers focused initially on securing a halt to the higher-grade enrichment as this represents a relatively short technical step from bomb-grade uranium. It would take much longer to reach that threshold from the 5 percent level. Enriched uranium can be used to fuel nuclear power plants, Iran's stated goal, but it can also provide atomic bomb material if refined more, which the West fears may be its ultimate aim. Experts say Iran potentially has enough LEU for a few nuclear weapons if refined much further. Limiting its overall enrichment capacity is expected be one of the thorniest issues in the negotiations on a long-term agreement. Thursday's IAEA report said that since the interim deal entered into force on January 20, Iran had not produced any 20 percent enriched uranium. It has also continued to reduce its stockpile of the 20 percent material and has not conducted "any further advances" at its Natanz and Fordow enrichment sites or the Arak research reactor, the report said. Western officials are worried about Arak as it can yield plutonium - offering a second route to make bombs - once it is operational. Iran says it is only designed to produce isotopes for medical treatments. (Editing by Andrew Roche)