ISFAHAN, Iran, August 8, 2005 (IslamOnline.net & News Agencies) – Under the supervision of the UN atomic watchdog, Iran resumed Monday, August 8, ultra-sensitive nuclear fuel work at its uranium conversion plant in Isfahan despite warnings from the European Union and Washington.

"Iran has resumed the conversion of uranium under the supervision of the International Atomic Energy Agency," the vice-president of Iran's Atomic Energy Agency Mohammad Saidi told journalists, according to Agence France-Presse (AFP).

The move, which risks seeing Iran hauled before the UN Security Council, comes after Iran rejected as "unacceptable" a package of EU proposals aimed at guaranteeing that it was not trying to build a nuclear weapon.

"The EU proposal was very insulting and humiliating," Saeedi said.

At the uranium conversion facility near the central Iranian city of Isfahan, two workers wearing white overalls, face masks and hard hats lifted a barrel full of uranium yellowcake, opened its lid and fed it into the processing line, Reuters reported.

A nuclear scientist, who declined to be named, told Reuters: "I am excited, I didn't believe it until the last moment thinking this may not happen, but now I am very happy."

Saidi said that Iran had started processing uranium into a substance called uranium tetrafluoride (UF4) and would then begin turning it into the feed gas known as uranium hexafluoride (UF6) by Wednesday.

He said the production would be stocked in Iran for use when the country resumes enrichment, adding that there was never any intention of it being exported.

Tehran insists however that actual enrichment remains suspended at the underground Natanz plant and that it still wants to pursue negotiations with the Europeans.

Iran had insisted it would resume the process despite numerous warnings from the United States and the Europeans.

Conversion turns uranium ore or yellowcake into a feed gas for enriching uranium, which can be the fuel for reactors or the explosive core of atom bombs.

IAEA inspectors installed security cameras to monitor the initial conversion process and an AFP correspondent saw technicians in protective clothing opening the barrel of yellowcake.