By Fredrik Dahl
VIENNA (Reuters) - Iran appears to be making headway in building a research reactor that could yield potential nuclear weapon material, adding to Western concerns about Tehran's atomic aims, experts and diplomats say.
The West's worries about Iran are focused largely on underground uranium enrichment plants at Natanz and Fordow, but it is also pressing ahead with construction of a heavy-water reactor near the town of Arak, which analysts say could produce plutonium for nuclear arms if the spent fuel is reprocessed.
Iran now plans to bring Arak on line in the third quarter of 2013, moving up its timetable from 2014, according to the latest U.N. information, although there is uncertainty whether it will be able to meet that target date.
Iran, rejecting Western allegations it seeks to develop a capability to assemble atomic arms, says its nuclear program is entirely peaceful and that the reactor will produce isotopes for medical and agricultural use.
"There is no reason to seriously doubt Iran's resolve to complete this project on time and begin operating the reactor," said Mark Hibbs of the Carnegie Endowment think-tank.
Most of what is needed is "dual-use, off-the-shelf equipment that Iran can buy all over the world using the procurement network it has set up" for its nuclear program, he said.
A U.N. report last month on Iran's nuclear program, which made headlines because it showed a doubling of the uranium enrichment capability at Fordow, suggested Tehran was also carrying out new work at Arak.
The report by the International Atomic Energy Agency (IAEA) said cooling and moderator circuit piping was being installed when inspectors visited the Arak facility in early August.
"They are certainly continuing to make progress on the reactor," one Vienna-based diplomat said. "As long as we still don't trust Iran's nuclear intentions, even the elimination of its enrichment capability will not eliminate all the danger."
Israel, believed to be the Middle East's only nuclear-armed state, sees Iran's nuclear program as a serious threat and has ramped up threats of attacking its arch enemy. If it does, the nuclear sites at Natanz, Fordow and Arak in central Iran are likely to be among the targets.
U.S. President Barack Obama this week warned Iran he would do what it takes to prevent it from getting nuclear weapons.
The European Union this month said it was "deeply worried" Iran had not suspended activity at the Arak facility, which like other nuclear sites is monitored by U.N. inspectors to ensure there is no diversion of nuclear materials.
In August, German prosecutors said police had arrested four men suspected of delivering valves for the heavy-water reactor, breaking an embargo on such exports to Iran.
If operated optimally, the heavy-water plant would produce about 9 kilograms of plutonium annually, or enough for about two nuclear bombs each year, said the Institute for Science and International Security, a U.S.-based think-tank.
"Before it could use any of the plutonium in a nuclear weapon, however, it would first have to separate the plutonium from the irradiated fuel," it added on its web site.
Iran has announced it has no plans to reprocess the spent fuel, the International Institute for Strategic Studies think-tank said in report last year.
But Mark Fitzpatrick, director of its non-proliferation and disarmament program, said "similarly sized reactors ostensibly built for research" have been used by India, Israel, North Korea and Pakistan to make plutonium for weapons.
Given Iran's "record of delays with other major nuclear facilities and the sanctions and export controls that have impeded access to foreign parts, it is very doubtful that the 2013 deadline will be met", he said.
(editing by Jane Baird)