Iranian president Mahmoud Ahmadinejad inaugurated a heavy-water production plant in Arak, Iran on Saturday, according to reports on Iranian television. The plant is part of the nuclear program of Iran, which the Iranian government says is for peaceful purposes only in the face of accusations by western governments that the country is trying to develop nuclear weapons.
The Arak facility, located 150 miles south of Teheran, is part of a larger project of building a heavy-water reactor in the city. The Iranian president has said that it will be used for medical purposes only, and has said that students, scientists, and journalists will be allowed to tour the plant. Construction on the production plant began in 1996. Iran provoked international controversy in April 2006 when it announced an earlier nuclear success: the enrichment of a small amount of uranium to reactor-grade levels (3.5% of the isotope uranium-235 using gas centrifuge technology. Concern was raised by some that if Iran was able to scale up its enrichment facilities, they could be used to produce bomb-grade uranium (90% uranium-235).
Heavy water is the colloquial name for deuterium oxide, H2O. To the unaided eye it appears identical to regular water, H2O, but it contains deuterium, a heavy isotope of hydrogen. Among its many uses, it is commonly used as a moderator in certain types of nuclear reactors. It is considered a nuclear proliferation risk because heavy-water production reactors can easily use natural uranium, and in the process transmute it into the element plutonium, which can be reprocessed and used as the fissile core of a nuclear bomb. Heavy-water production reactors have been used for this purpose by India, Israel, Pakistan, North Korea, Russia and USA. There is no evidence that heavy-water power reactors, such as the Canadian-produced CANDU reactor, have been used for military plutonium production, but in theory they can also be used for this purpose, as any uranium reactor will produce certain amounts of plutonium. 
Critics have charged that current Iranian research reactors do not require the amount of heavy water which the production facility will be able to create. Iran's other controversial reactor site at Bushehr does not require heavy water. Though many of Iran's nuclear facilities do have possible peaceful uses, most of them are considered dual-use technology, which could also be diverted into military purposes. 
In 2003, the still-developing production site was inspected by a delegation from the International Atomic Energy Agency, the non-proliferation wing of the United Nations in charge of enforcing the Nuclear Non-Proliferation Treaty, of which Iran is a signatory. At the time, Iran claimed the heavy water would be for exporting to other countries, and later clarified that it would be used for a heavy-water reactor in Arak. Iran has claimed that it would have purchased a heavy-water research reactor from abroad but it had been unable to do so, and so had to resort to an indigenous design and construction. Iran claims that the reactor will be used to produce radioisotopes, which have many medical applications. IAEA inspectors questioned this on the basis that the reactor plans they had seen did not have adequate facilities for producing radioisotopes. Iran claimed that the plans were still developing and that the missing facilities, known as hot cells, could not yet be designed without knowing other characteristics of the reactor, and that they were building a separate facility with those capabilities at the same site.
Iran has insisted that under the terms of the 1968 treaty, it is guaranteed the right to develop nuclear energy for peaceful purposes. The IAEA has called upon Iran in the past to freeze production of the heavy-water reactor at Arak, but the Iranian government has refused and began construction on the 40MW reactor facility in 2004. It has been estimated that it will take five years to build, based on the previous experience of North Korea.
None of Iran's facilities currently have the ability to produce weapons-grade nuclear material, and most experts say it would be at least a decade for Iran to be able to build a functional nuclear weapon.
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Iran inaugurates heavy-water production plant