* IAEA report says Iran not addressing military concerns
* Iran envoy says allegations “totally fabricated”
* Plans to start operating second enrichment site by summer
* Report may stoke Western fears of Iran’s nuclear aims
(Adds new centrifuges, Iran comment, analyst quote)
By Fredrik Dahl
VIENNA, Feb 25 (Reuters) - The U.N. atomic watchdog has received new information regarding allegations that Iran may be seeking to develop a nuclear-armed missile, the agency said in a report voicing deepening concern about the issue.
The confidential document from the International Atomic Energy Agency (IAEA) signalled growing frustration at what it sees as Iran’s lack of cooperation with a long-running investigation into its disputed nuclear programme.
It also underlined Iran’s determination to press ahead with sensitive atomic activity despite four rounds of U.N. sanctions since 2006, saying the country had informed the IAEA it would soon start operating a second uranium enrichment plant.
The Islamic Republic had also told the Vienna-based U.N. body of plans to step up efforts to introduce more advanced machines used to enrich uranium, which can have both civilian and military purposes, the report said.
The report looked likely to add to Western suspicions that Iran is secretly bent on building a nuclear weapons capability from its enrichment programme, which Tehran denies.
It may also provide the United States and allies with additional arguments for further tightening sanctions on Iran, after talks in December and January failed to make any progress towards resolving the dispute.
The IAEA report, obtained by Reuters on Friday, said it remained concerned about possible current activity in Iran to design a nuclear payload.
“Iran is not engaging with the agency in substance on issues concerning the allegation that Iran is developing a nuclear payload for its missile programme,” it said.
For several years, the IAEA has been investigating Western intelligence reports indicating Iran has coordinated efforts to process uranium, test explosives at high altitude and revamp a ballistic missile cone in a way suitable for a nuclear warhead.
The report said that based on an analysis of “additional information which has come to its attention since August 2008, including new information recently received, there are further concerns which the agency ... needs to clarify with Iran.”
Iran’s ambassador to the IAEA, Ali Asghar Soltanieh, told Reuters that allegations of military aspects to Iran’s nuclear programme were “totally fabricated”.
Enriched uranium can be used to fuel nuclear power plants, which is Iran’s stated aim, or provide material for bombs if processed much further.
In a surprise development, the report said Iran had said it “would have to unload fuel assemblies” from the core of the Russian-built Bushehr reactor, which Iranian officials have previously said would soon start generating electricity.
Iran did not give a reason for its move, which was announced a month after Russia said NATO should investigate a computer virus attack on Bushehr last year, saying the incident could have triggered a nuclear disaster on the scale of Chernobyl.
Security experts say the Stuxnet computer worm may have been a state-sponsored attack on Iran’s nuclear programme and may have originated in the United States or Israel.
Despite a brief halt of enrichment work in November, Iran’s total output of low-enriched uranium rose to reach a total of 3.61 tonnes, from 3.18 tonnes at the end of October, suggesting steady work despite technical woes and possible cyber sabotage.
Experts say that amount could be enough for two bombs if refined much further.
In a further sign that Tehran has no intention of bowing to demands to halt such activity, the report said Iran had told the IAEA earlier this week it planned to begin feeding nuclear material at its second enrichment facility “by this summer”.
In September 2009, Iran revealed the existence of the site, Fordow, being built inside a mountain bunker near the central city of Qom after keeping it secret for years.
Iran had also said it planned to install two new centrifuge cascades in a R&D facility at its main enrichment plant at Natanz with more modern machines than the IR-1 model now in use, which is based on a 1970s design and prone to breakdowns.
“They should have a significantly higher enrichment output and a lower failure rate than the IR-1 centrifuge,” the Institute for Science and International Security, a Washington-based think-tank, said in an analysis. (Editing by Alison Williams)