Tehran, Aug. 1 (Reuters): Iran said it would break UN seals on a nuclear plant and resume work that the West suspects could help it build an atom bomb, defying EU warnings such a step could crush hopes of a negotiated solution.

Two years of hard bargaining over a nuclear programme that Tehran had kept secret for 18 years appeared to be heading towards a crisis that could see Iran’s case sent to the UN Security Council for possible sanctions.

The EU “Big Three” of Britain, France and Germany have been trying to mediate between the US, which insists Iran is trying to produce nuclear weapons, and the Islamic Republic that says it has a right to develop peaceful atomic technology.

“Iran sent a letter to the IAEA (the UN’s nuclear watchdog agency). Iran is to remove the seals today,” Supreme National Security Council spokesman Ali Aghamohammadi said.

“Iran has decided to resume the uranium conversion activities at ... Isfahan on August 1,” said the letter, a copy of which was obtained by Reuters.

The conversion plant near the central city of Isfahan turns uranium ore into uranium hexafluoride gas. The gas is pumped into centrifuges spinning at supersonic speed to enrich uranium.

Highly enriched uranium can be used for nuclear bombs, if enriched at low levels is used as fuel in nuclear power plants.

Tehran’s arch foe Israel estimates Iran will be able to build a nuclear bomb by 2008, a military officer said. Iran says it only wants nuclear power to generate electricity.

The IAEA urged Iran not to resume its frozen nuclear work. “I call on Iran to continue the negotiation process with the E3/EU and not to take any action that might prejudice the process at this critical stage,” IAEA director Mohamed ElBaradei said in a statement, referring to the so-called EU3 of Britain, Germany and France.

The EU said if Iran resumed work at Isfahan, it would break an agreement it made in Paris in November last year.

A spokesman for the European Commission told a press briefing: “The commission very much hopes for a negotiated solution. We would also hope that no steps would be taken over the coming days to endanger such a negotiated solution.”

“(German) foreign minister (Joschka) Fischer has warned that this is a miscalculation in Tehran,” a German foreign ministry spokesman told a news briefing in Berlin.