TEHRAN, Oct 6: Iran said on Wednesday they will not cede to international demands for the Islamic republic to suspend its uranium enrichment activities, saying Tehran was ready for confrontation or negotiation.

"We have said clearly that we will not apply the second part of the resolution concerning the total suspension of enrichment," Iran's chief nuclear negotiator Hassan Rowhani told state television.

He was referring to a resolution passed on Sept 18 by the board of the International Atomic Energy Agency (IAEA) calling on Iran to "immediately" widen a suspension of enrichment to include all uranium enrichment-related activities - such as making centrifuges, converting yellow cake into UF6 feed gas, and constructing a heavy water reactor.

"We have suspended enrichment voluntarily and we will not accept any constraints," Mr Rowhani added. "To sort out this case, there are two possibilities: Either we find a political solution and close the case (at the IAEA) or we move towards confrontation. We are ready for both."

Iran, facing a Nov 25 deadline, risks being referred to the UN Security Council if it fails to comply. But another official said Iran was continuing to convert uranium.

"Out of the 37 tonnes of yellow cake, a few tonnes has been used and converted. This is an experimental and testing process," Hossein Mousavian, a deputy to Mr Rowhani, told AFP.

He was referring to 37 tonnes of uranium yellow cake which Iran had previously said it would be converting into the gas, uranium hexo flouride (UF6), that is fed into centrifuges to make enriched uranium.

Mr Mousavian nevertheless said that the conversion activities were under the IAEA supervision. "The process of testing has from the beginning been under 100 per cent supervision and control of the IAEA, in the framework of safeguards agreements, the additional protocol and IAEA rules and regulations, and every milligramme of this testing process is controlled by the IAEA," he said.

"The testing process is continuing." And another official said Iran could resume the actual process of enriching uranium within months. Depending on the level of purification, enriched uranium can be used either as fuel for a civilian reactor or as the explosive core of a nuclear bomb. Iran says it only wants to generate electricity.

"Why should we not resume enrichment?" declared Kazem Jalali, spokesman for the Iranian parliament's foreign policy and national security commission, after deputies in the parliament on Tuesday began a legislative drive to force a resumption of enrichment.

"Where in the (nuclear) NPT and in the additional protocol does it say that enrichment is forbidden and therefore it should be stopped? It is our natural right," he continued.

"This bill is an ordinary bill, and it will be dealt with when it is its turn, and I think within a month or 40 days it will be the turn of this bill to be read in the Majlis," said Mr Jalali, a 37-year-old MP from the central city of Shahrud.

"I guess that it will be approved before Nov 25. After the bill is ratified the government has to implement it. I think it would be within months," he said when asked when enrichment could resume.

Speaking in Khartoum, President Mohammad Khatami meanwhile reiterated Tehran's resolve that it was not interested in a nuclear bomb. "Acting in conformity with our religious values and our commitment to the treaty banning proliferation of nuclear weapons, we are not going to produce nuclear weapons," Mr Khatami told reporters at the end of a three-day visit to Sudan.

He, however, declared that Tehran would not give in to foreign pressure aimed at stopping it from a peaceful nuclear energy programme. "We will continue our cooperation with the IAEA but at the same time we will not subdue ourselves or our nuclear programme because of foreign pressure," Mr Khatami said.

"It is our duty and right to use this nuclear energy for peaceful purposes and I'd like to assure the international community that we will not go to the extent of producing nuclear weapons."

ENRICHMENT CONTINUES: Iran said on Wednesday it had processed several tonnes of raw "yellow cake" uranium to prepare it for enrichment - a process that can be used to make atomic weapons.

A spokeswoman for the UN International Atomic Energy Agency (IAEA) said the uranium processing was being closely monitored by the IAEA to ensure that nothing would be diverted for weapons purposes.

"The uranium conversion is being conducted under the supervision of the IAEA," spokeswoman Melissa Fleming said. It was unclear how much processed uranium had been produced so far, though Iran's chief delegate to the IAEA, Mr Mousavian, indicated the amount was not large.

"It is an experimental process and we have not entered the industrial phase," Mr Mousavian told Reuters in Tehran. Iran's uranium conversion plant at Isfahan intends to process a total of 37 tonnes of yellow cake, which experts say could be enriched into material for up to five atomic weapons.

The IAEA has installed monitoring cameras at Isfahan to oversee the production of uranium hexafluoride, the feed material for centrifuges used in enrichment. "They (the IAEA) were aware that the production had begun," a diplomat close to the IAEA told Reuters. The diplomat said the production began around 10 days ago.

Mr Mousavian said the oversight was intense, with the agency making certain that "each milligram of the used yellow cake (is) under the IAEA's watch and supervision."

Mr Mousavian reiterated that Iran views enrichment as its "legitimate right". On Tuesday, Iranian radio reported that Iran's conservative-dominated parliament has prepared a bill that would force the government to resume uranium enrichment. -Reuters/AFP