TEHRAN: Iran said it will start making higher-grade reactor fuel on Tuesday and will add 10 uranium enrichment plants over the next year in a nuclear expansion sure to stoke tensions with the West.

The statement by Iran's Atomic Energy Organization head Ali Akbar Salehi followed orders from President Mahmoud Ahmadinejad on Sunday for work to begin on producing atomic fuel for a Tehran research reactor.

It may increase Western suspicions that Iran's nuclear program is aimed at making bombs, a charge Tehran denies.

Iran informed the U.N. nuclear agency in a letter on Monday about its decision to enrich uranium at its Natanz plant to a level of 20 percent for use in the reactor producing medical isotopes, compared with the 3.5 percent it now makes.

"Today we handed over the letter," Iran's envoy to the International Atomic Energy Agency (IAEA), Ali Asghar Soltanieh, told Iran's Arabic-language al Alam state television.

The letter said 20 percent enrichment would start on Tuesday with the aim of later converting it into fuel and it invited U.N. inspectors to monitor the process, Soltanieh told Reuters.

Salehi earlier told al Alam: "Iran will set up 10 uranium enrichment centres next year." The Iranian year starts in March.

Iran mooted such a plan late last year but gave no time frame.
The announcements raise the stakes in Iran's dispute with the West, although experts doubt Tehran has the technical ability to launch 10 new plants so soon and believe it is finding it harder to obtain crucial components due to U.N. sanctions.

Analysts say it may be a negotiating tactic to prod the West into accepting Iranian terms for a nuclear fuel swap.

But it could backfire if it only serves to make Western powers determined to push for more sanctions against Iran, the world's fifth-largest oil exporter, over its refusal to suspend enrichment.
Ahmadinejad said Iran remained open to a proposed nuclear fuel exchange with world powers, which they hope would minimize the risk of Iran developing atomic bombs. Iran says it wants only to generate electricity from low-level enrichment.

Salehi suggested production of the material would be halted if Iran could import 20 percent uranium, the degree of purity required for conversion into special fuel needed to run a Tehran nuclear medicine reactor, Iran's stated goal for the move.

Tehran has voiced readiness to send low-enriched uranium (LEU) abroad in a swap for fuel for the reactor, due to run out of it later this year. Such a deal would remove the bulk of potential nuclear bomb material Iran has stockpiled.