Iran has admitted processing several tonnes of raw "yellowcake" uranium, a key stage in the development of weapons-grade nuclear material.
Hossein Mousavian is masterminding Iran's nuclear policy
The country's uranium conversion plant at Isfahan plans to convert a total of 37 tonnes of uranium, which could be enriched into five atomic bombs.
The International Atomic Energy Authority (IAEA) has demanded Iran stop work on uranium enrichment technology.
President Mohammad Khatami has insisted that Iran's nuclear policy is peaceful.
The Iranian delegate to the IAEA, Hossein Mousavian, said that a few tonnes of raw uranium had been converted into a gas, uranium hexafluoride.
The conversion process yields a volume of gas similar to the original amount of uranium.
The resulting gas can then be spun in centrifuges to produce weapon or fuel-grade uranium.
Mr Mousavian described the conversion as an "experimental process", and insisted that the IAEA was monitoring Iranian activities very closely.
"Out of the 37 tonnes of yellowcake, a few tonnes has been used and converted.
"Each milligram of the used yellowcake (is) under the IAEA's watch and supervision."
In September, the IAEA passed a resolution demanding that Iran freeze all programmes and plans to develop the capability to enrich uranium.
The resolution included a prohibition on the development of "feed material" for centrifuges, such as uranium hexafluoride.
The United States and Israel have both accused Iran of furthering its nuclear programme in an effort to develop nuclear weapons.
Speaking in the Sudanese capital, Khartoum, President Khatami denied the allegation.
"We will continue our co-operation with the IAEA, but at the same time we will not subdue ourselves or our nuclear programme because of foreign pressure," he 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."