By Hashem Kalantari
TEHRAN (Reuters) - Iran will make its own fuel for a nuclear research reactor later this year, its foreign minister said on Saturday, announcing a "breakthrough" which appeared timed to strengthen Tehran's hand in talks with world powers.
Less than two weeks before a second round of talks with the five permanent members of the U.N. Security Council and Germany, Ali Akbar Salehi said Iran was pushing ahead with the uranium enrichment which the Council has asked it to suspend due to fears it could be used for atomic bombs.
Salehi told the semi-official Fars news agency that an offer by those countries to supply fuel for the reactor in exchange for some of Iran's low-enriched uranium -- a central element of previous talks -- was losing its appeal as Iran would soon be able to make the fuel itself.
"We are hopeful to witness in the course of the first half of next (Iranian) year (which starts March 21) the injection of the first 20 percent (enriched uranium) batch of Iranian-produced fuel to the Tehran nuclear research facility," Salehi said.
Salehi said it was set to make both the fuel "plates," used in the Tehran reactor, and nuclear fuel rods, which are used in power stations, in the central Iranian city of Isfahan.
"A breakthrough was made in the connection to the production of fuel rods and plates and with the completion of this plant at Isfahan we are among the few countries able to produce both of them," he said.
Currently Iran's only nuclear power station, the Russian-built Bushehr plant which is due to start producing electricity soon, uses fuel imported from Russia.
Many countries fear that Iran's civil nuclear program, which it insists is entirely peaceful, could be a cover for making nuclear weapons and in October 2009 a tentative pact was struck for Iran to export some of its low-enriched uranium in exchange for higher enriched, 20 percent uranium, for the Tehran reactor which makes medical isotopes.
But that deal -- meant as a confidence building measure -- unraveled when Tehran backed away from the terms, ultimately leading to a new wave of sanctions which some analysts say helped push Tehran back to the negotiating table.
Salehi, who is head of Iran's Atomic Energy Organization as well as being caretaker foreign minister since last month, said Iran had produced almost 40 kg of 20 percent enriched uranium, up from an estimated 30 kg in October.
Iran announced last February it had escalated enrichment to 20 percent, a key step toward weapon-grade material which could be achieved through further processing.
"The more they delay the talks the more we will advance our work and after some time talks over a nuclear fuel exchange would lose its meaning," Salehi said.
Salehi made a similarly triumphant statement about Iran's nuclear progress the day before the latest round of talks began in December, telling the media that Iran was now making its own uranium concentrates, known as yellowcake, and so was "self-sufficient in the entire fuel cycle."
Western analysts say Iran sometimes exaggerates its nuclear advances to gain leverage in its stand-off with the West.
European Union foreign affairs chief Catherine Ashton, who heads the so-called P5+1 delegation, said on Friday the EU rejected Iran's invitation to some diplomats to visit nuclear sites ahead of the Istanbul talks scheduled for January 21-22.
(Writing by Robin Pomeroy; editing by Myra MacDonald)