* Iran may have 250 kg of 20 percent uranium at end-2012 - Heinonen
* Represents most of the work needed to weapons-grade material
* Iran denies bomb aims, says its nuclear programme peaceful
VIENNA, Jan 12 (Reuters) - Having switched production of higher-grade enriched uranium to a new, underground site, Iran is now just a year or so away from having enough such material for a nuclear bomb, a former head of U.N. nuclear inspections said.
However, Olli Heinonen wrote in an article published on Thursday that building a stock of some 250 kg of 20-percent enriched uranium - a form that could within weeks be further purified to the 90-percent weapons grade - did not automatically mean Iran could deploy a bomb without further engineering work.
Heinonen, a Finn, was deputy director general of the International Atomic Energy Agency until 2010 and is now at Harvard University. He made the prediction days after Iran confirmed the start of 20-percent enrichment inside the Fordow mountain, fuelling Western fears Tehran is seeking atomic arms.
Estimates on when Iran, which says its nuclear programme is entirely peaceful, might be able to develop such weapons are significant as they could help determine the time available for major powers to resolve the long-running nuclear row peacefully.
Iran says it needs to refine uranium to that 20-percent level of fissile purity, compared with the 3.5 percent normally needed to fuel nuclear power plants, for a medical research reactor in Tehran producing isotopes for cancer patients.
But Western diplomats and experts question the credibility of that justification and note that acquiring the ability to produce 20-percent uranium is a big step closer to potential weapons material of 90 percent, shortening the time required for any "breakout" bid to produce bombs.
"If Iran decides to produce weapons-grade uranium from 20-percent enriched uranium, it has already technically undertaken 90 percent of the enrichment effort required," Heinonen wrote in a Foreign Policy magazine article.
"What remains to be done is the feeding of 20-percent uranium through existing, additional cascades to achieve weapons-grade enrichment ... This step is much faster from earlier ones."
BUNKER SITE
Iran has until now produced 20-percent uranium above ground at another location but announced last year it would shift this higher-grade activity to the underground site at Fordow, offering better protection against any enemy air strikes.
It also plans to step up the work, conducted by centrifuge machines that spin at supersonic speed to increase the ratio of the fissile isotope U-235. It continues to produce 3.5-percent uranium at its main enrichment site at Natanz.
At current output rates, Heinonen said, Iran can expect to have about 250 kg (550 lb) of uranium refined to 20 percent by the end of 2012 and this could be "turned to weapons-grade material in a month's time". Experts say that about 200 kg of such uranium would be needed to build a single nuclear bomb.
This does not mean, however, that Iran would be able to so quickly assemble a nuclear weapon, a "complex endeavour that requires precision engineering capabilities that Iran may lack".
But, it "would be able to 'break out' of its international obligations very quickly, should it decide to do so," he added.
An IAEA report last year said Iran had produced about 80 kg of 20-percent uranium since launching this work in early 2010 -- still far less than the roughly 200 kg experts say would be needed for one bomb if refined to weapons grade.
Nuclear experts give different estimates for when Iran might be able to build a bomb if it decides to do so, ranging from as quickly as six months to a year or more.
Producing sufficient fissile material is seen as the most time-consuming task, but making the actual weapon could take at least half a year, the International Institute for Strategic Studies think tank said in a report last year. (Reporting by Fredrik Dahl; Editing by Alastair Macdonald)
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