* Move will cut over half of Amplats workforce
* CEO says would prefer to sell assets in one go
* Company is focusing on more mechanized operations
* Amplats lost over 400,000 ounces to 5-month strike
(Adds additional CEO comments)
JOHANNESBURG, July 21 (Reuters) - World number-one platinum producer Anglo American Platinum is to sell a swathe of its most labor-intensive South African mines after a five-month strike shattered its hopes of ever making them profitable.
The mines account for over half of the company's workforce but only a quarter of production and their viability was dealt a blow when miners won pay increases of up to 20 percent. Amplats said it would now focus on its more mechanized mines.
For the miners who faced hardship in their campaign for better pay, a sale could increase the risk of future lay-offs.
The buyers are likely to be companies with a focus on deep-level, labor-intensive mines, which may have more appetite than Amplats for the challenge of making them commercially viable.
One of the biggest hurdles will be stiff opposition to any job cuts from unions and politicians. South Africa's National Union of Mineworkers (NUM) condemned the plan to sell the mines.
"Any sale is going to result in job losses and this is a punishment for poor workers," its general secretary, Frans Baleni, told Reuters on Monday.
Amplats said it was selling its Union mine, its operations at Rustenburg and South African joint venture Pandora, calling them "good long-life assets".
Ascribing a value to those assets in the shorter term appeared to present a challenge for analysts, faced with uncertainty over platinum prices and the risk that future attempts to cut costs at the mines will further inflame labor relations.
Amplats' Rustenburg operations employ around 20,000 people while Union has about 7,000, representing over half of the company's head count. The potential for fresh unrest is great as the NUM loses members to the more hardline Association of Mineworkers and Construction Union (AMCU), which oversaw the strike, the longest in the history of South Africa's platinum industry.
Some analysts have said the Rustenburg mines and the Union mine could be worth between $1 billion and $2 billion, but others were more pessimistic.
Excluding the joint ventures Pandora and Bokoni, "we value the combination at a negative $800 million, hence simply giving the assets away would be deemed a result", said Nomura analysts.
Citibank said Union was worth 12 billion rand, but it saw Rustenburg as a liability that would drag down the value of the overall assets by around 14 billion rand.
"We view the potential sale of these as positive, but already reflected in Amplats' share price," it said.
Amplats shares were up 4.6 percent in late trading in Johannesburg.
"NOT A FIRE SALE"
Griffith said a number of potential suitors had expressed interest and insisted at an interim results presentation that "this is not a fire sale."
He said the company had not been forced to sell because of the strike and had been repositioning in favor of less labor-intensive activities for some time.
But the stoppage has clearly forced its hand due to the heavy losses in production.
Amplats parent Anglo American had already signaled its intention to reduce its troubled platinum portfolio.
Anglo American is trying to achieve a return on capital employed (ROCE) of at least 15 percent by 2016. In 2013 the figure was 11 percent, with Amplats at only 2.7 percent.
Platinum miners have been struggling in the face of depressed prices for the precious metal, used for emissions-capping catalytic converters in automobiles.
A buyer would inherit a three-year wage agreement with the hard-line AMCU union. But it would also secure annual production of around 600,000 ounces, or a quarter of Amplats' capacity.
The apparent front-runner is Sibanye Gold, whose Chief Executive Neal Froneman told Reuters this month he wanted a platinum deal before the end of the year and could easily raise $1 billion to seal one.
Sibanye was itself spun off from Gold Fields as a vehicle to manage its labor-intensive South African operations so that Gold Fields could focus on mechanized mining.
Sibanye also has Chinese investors, bringing it a cheap potential source of funding. Another Chinese-backed company, Wesizwe Platinum, has also said it was looking at buying further assets in the sector.
Amplats lost over 420,000 ounces to the strike, which also affected rivals Impala Platinum and Lonmin.
It said first-half headline earnings dropped to 60 cents per share, a fall of almost 90 percent.
Explaining the decision to sell the mines in an interview, Griffith told Reuters that Amplats had limited capital to spend and needed to allocate it wisely.
"We can't do everything," he said. "In many companies' hands, owning Rustenburg and Union would be way better than the assets they have. They would spend the money and give it the love and attention it needs."
He said the company's preference was to sell the Rustenburg operations - which it had effectively consolidated into three mines from five - and Union as a single package.
"But we do realize that it's a big check," he said, so the second option would be separate sales or, thirdly, a stock market listing. ($1 = 10.6256 South African Rand)
(Additional reporting by Silvia Antonioli in London; editing by Tom Pfeiffer)