The UN atomic agency said Monday that Iran is now enriching uranium at a new site in a hard-to-bomb mountain bunker, in a move set to stoke Western suspicions further that Tehran wants nuclear weapons. \"The IAEA can confirm that Iran has started the production of uranium enriched up to 20 percent... in the Fordo Fuel Enrichment Plant,\" International Atomic Energy Agency spokeswoman Gill Tudor said in a statement. \"All nuclear material in the facility remains under the Agency\'s containment and surveillance,\" the Vienna-based watchdog added. The Islamic republic admitted the existence of the previously secret facility in 2009 and earlier IAEA reports had said that Iranian scientists were preparing to begin operating the facility\'s centrifuges. Iran, which insists its nuclear programme is for exclusively peaceful purposes, has repeatedly said it will not abandon uranium enrichment despite four rounds of UN Security Council resolutions calling on Tehran to desist. While nuclear energy plants need fuel enriched to 3.5 percent, Iran says the 20-percent enriched uranium is needed for its Tehran research reactor to make isotopes to treat cancers. Western powers, however, reject this, believing Iran has been researching ways to develop and deliver nuclear weapons, and has piled on sanction after sanction to try to halt the work. US State Department spokeswoman Victoria Nuland said Monday that Iran\'s move was \"a further escalation of their ongoing violations with regard to their nuclear obligations.\" \"At a time when the international community is asking Iran to provide assurances of the peaceful nature of its programme, this is a provocative act which further undermines Iran\'s claims that its programme is entirely civilian in nature,\" British Foreign Secretary William Hague said. Germany said that \"the international community\'s concern that the Iranian nuclear programme is serving military purposes is growing.\" Experts point out that the process of obtaining 20 percent enriched uranium represents most of the work needed to get the uranium enriched to the level of 90 percent or above required for atomic weapons. The Fordo news \"is worrisome because 20 percent is so close to being weapons-usable and because there is absolutely no civilian need for it now,\" Mark Fitzpatrick from the International Institute for Strategic Studies (IISS) said. \"It brings them closer to being able to produce enough fissile material for a nuclear weapon,\" the London-based analyst told AFP. Fordo, a reinforced facility sunk deep under a mountain 150 kilometres (90 miles) southwest of Tehran, is designed to be difficult if not impossible target to bomb. Enriching uranium is one of three main areas needed to develop a nuclear arsenal. Iran would also need to make the enriched uranium weapons-ready and manufacture a missile to carry it to target. A report from the IAEA in November, the agency\'s hardest-hitting to date, included evidence that Western powers said confirmed Iranian efforts in these other two areas, stoking speculation of a possible Israeli air strike. The United States, the European Union and other allies have sought to tighten the screw since the report -- which Iran dismissed as \"baseless\" -- by targeting Tehran\'s crucial oil sector and its central bank. Tensions have also been stoked by Iran showing off what it said was a CIA drone it captured using cyberwarfare, while in October Washington alleged Iranian involvement in a suspected plot to assassinate the Saudi ambassador to the US. Iran, where a judge on Monday reportedly sentenced to death a US-Iranian former Marine for \"membership of the CIA\", has threatened to close the Strait of Hormuz, a chokepoint for 20 percent of the world\'s oil. US Defence Secretary Leon Panetta warned on Sunday that any such move would cross a \"red line\" and \"we would take action and reopen the strait.\" Iran\'s supreme leader Ayatollah Ali Khamenei said that Tehran will not bow to sanctions, in comments broadcast on state television on Monday. \"While the Iranian people have travelled the road to success and see the signs of new victories to come, the (Western) oppressor is trying to frighten the Iranian people and officials by brandishing the threat of sanctions,\" he said.