GENEVA/TEHRAN (Reuters) – Iran announced what it called a major step forward in its nuclear programme on Sunday, showing determination to pursue it a day before talks in Geneva with world powers which fear Tehran may be seeking atom bombs.
Nuclear energy chief Ali Akbar Salehi said Iran would use domestically produced uranium concentrates, known as yellowcake, for the first time at a key nuclear facility, cutting its reliance on imports of the ingredient for nuclear fuel.
"This means that Iran has become self-sufficient in the entire fuel cycle," Salehi said.
Western analysts say Iran sometimes exaggerates its nuclear advances to gain leverage in its stand-off with the West.
The announcement appeared timed to show Iran will not back down in a long-running battle over its nuclear programme before the meeting on Monday and Tuesday in Geneva where six powers are seeking assurances its atomic ambitions are peaceful.
Salehi told a televised news conference that the announcement meant "we will be taking part in the negotiations with strength and power." He said the Geneva talks were for the benefit of the other countries, not Iran.
"We want to create a graceful solution out of the political deadlock for those who have pressurized us."
White House National Security Council spokesman Mike Hammer said the announcement was not unexpected since Iran has been trying to develop its own uranium programme for years.
"However ... this calls into further question Iran's intentions and raises additional concerns at a time when Iran needs to address the concerns of the international community," Hammer said.
Before the Geneva talks, Hammer said, the United States and its allies are looking to see if Iran will enter into discussions "with the seriousness of purpose required to begin to address international concerns with its nuclear program."
Iran says its nuclear programme is aimed at power generation while the West suspects Tehran seeks weapons capability, and has tightened sanctions on the Islamic state in recent months.
Western diplomats say the sanctions are hurting Iran's oil-dependent economy despite the Tehran leadership's denials of any such impact, and they hope this will persuade them to enter serious negotiations about its nuclear programme.
In Bahrain, General James Mattis, the Commander of U.S. Central Command, told a Gulf security conference he was "nowhere near pessimistic yet" about the prospects for resolving the Iranian nuclear issue with diplomacy, as opposed to using force, a so-called Plan B.
"The idea that we would have to focus early on a plan B would actually undercut the commitment to plan A, which is to solve this using all diplomatic and economic means," he said.
Asked upon his arrival in Geneva whether he was optimistic about the talks, Iranian nuclear negotiator Saeed Jalili said: "Everything depends on the other party's attitude."
"Is there any need to do that?" said another Iranian official, who declined to be named, when asked whether Iran's enrichment activities would be discussed at the meeting.
Asked whether Sunday's yellowcake announcement was a signal that Iran would press ahead with its activities, he said: "Of course."
IRAN DISMISSES FUEL SWAP
Western powers want Iran to suspend uranium enrichment activity, which can produce fuel for nuclear power reactors or provide material for bombs if refined to a higher degree.
President Mahmoud Ahmadinejad has said Iran's enrichment will not be discussed in Geneva, though it is the central concern of the six powers -- the United States, Russia, China, France, Britain and Germany -- that will be present.
Analysts expect no breakthrough in Geneva, the first such meeting in over a year. At most, they believe, the gathering will recreate a climate conducive to negotiations and lead to more meetings that would tackle substantive issues.
In a TV interview late on Sunday, Salehi said Iran was not interested in reviving a fuel swap deal which was agreed in principle in the last talks more than a year ago.
That deal would have seen Iran export some of its low-enriched uranium abroad in exchange for purer fuel for a medical research reactor in Tehran. He said Iran was likely to be able to produce its own fuel for the Tehran reactor by the end of next summer, so such an offer was no longer important.
"Day by day it loses its meaning. If we produce the fuel assembly by next August what meaning does it have? Today we see it more as a political issue ... We think it is an honorable way out of this deadlock for them," he said.
Last week's killing of an Iranian nuclear scientist in Tehran, which Iran has blamed on Western intelligence services keen to impede its nuclear advances, could cloud the atmosphere for dialogue in the Swiss city.
"Once again I am telling the ill-wishers and international criminals ... that we are here and we are resisting and will continue our resistance," Salehi said.
(Additional reporting by Robin Pomeroy and Ramin Mostafavi in Tehran, Fredrik Dahl in Vienna, Steve Holland in Washington; writing by Fredrik Dahl and Robin Pomeroy; editing by Myra MacDonald)