TEHRAN, Iran - Iran now controls the entire cycle for producing nuclear fuel, the Iranian president said Saturday, highlighting his country's growing capabilities at a time when the U.S. wants to negotiate with Iran over its nuclear program.

Mahmoud Ahmadinejad's comments came two days after the inauguration of a facility which produces uranium oxide fuel pellets for a planned heavy-water reactor -- the final step in the long, sophisticated nuclear fuel cycle.

"Today, with the grace of God, Iran is a country controlling the entire nuclear fuel cycle," Ahmadinejad said on state television.

The step is significant toward furthering Iran's nuclear energy capabilities and, an analyst said, could be designed to strengthen Iran's position at a time when the United States says it would negotiate with the Iran over it nuclear program.

However, it is less worrying for the West in terms of its potential to be used in nuclear weapons than Iran's advanced enriched uranium program.

Spent fuel from heavy-water reactors can eventually be reprocessed to produce plutonium for a warhead, but that would still take many years whereas Iran is already believed to have enough enriched uranium that could be used to build a nuclear weapon should Iran decide to do so.

The U.S. and its allies have expressed concern over Iran's developing nuclear program for fear it masks a weapons program. Tehran says its nuclear program is only designed to create peaceful energy.

Ahmadinejad has announced several times in the past that Iran has the knowledge necessary to produce its own fuel, but with the opening of the new facility near the central city of Isfahan, the Islamic Republic says it now has the capability on a large scale.

Ahmadinejad's comments come after U.S. officials said earlier this week that U.S. diplomats would attend group talks with Iran over its suspect nuclear program. That would be a major departure from president George W. Bush's policy of isolation from a nation he once deemed to be evil.

Ahmadinejad said Thursday during the inauguration ceremony that his country is open to talks with the U.S. and other countries over its nuclear program. But he insisted the talks must be based on respect for Iran's rights, suggesting the West should not try to force Tehran to stop uranium enrichment.