Vienna, Austria ? Iran will start building a nuclear reactor in June that can produce weapons-grade plutonium, diplomats said Wednesday. Although Tehran insists the heavy water facility is for research, the decision heightens concern about its nuclear ambitions.

One diplomat said the planned 40-megawatt reactor could produce enough plutonium for a nuclear weapon each year, an amount experts commonly say is 8.8 pounds.

The diplomats told The Associated Press that Iran informed the U.N. nuclear watchdog agency last year of its plans to build a reactor. They said Iranian officials announced the June start date during talks Tuesday in Tehran with Mohamed ElBaradei, director general of the Vienna-based International Atomic Energy Agency.

With Iran open about its desire to build the facility, the diplomats said the Iranian decision to go ahead with the plan was not an overt example of Tehran backtracking on pledges to dispel suspicions it is pursuing nuclear weapons.

Still, it “sends a bad signal at a time all eyes are on Iran,” one of the diplomats said, speaking on condition of anonymity.

International scrutiny of Iran’s nuclear program has been growing since the IAEA discovered last year that Tehran had not disclosed large-scale efforts to enrich uranium, which can be used in nuclear warheads.

Traces of weapons-grade uranium found by inspectors and evidence of suspicious experiments led to a series of critical resolutions by the IAEA’s board of governors.

The resolutions stopped short of forcing Iran to go before the U.N. Security Council, as demanded by the United States. But if ElBaradei gives a negative progress report on Iran when the IAEA board of governors meets in June, Tehran could face action by the security council.

Iran argues that it needs the reactor to produce radioisotopes for medical research.