WINNIPEG, Manitoba (Reuters) - U.S. fertilizer company Mosaic Co MOS.N has laid off 46 unionized workers, or 8 percent of the workforce, at its Colonsay, Saskatchewan potash mine in Western Canada, the company said on Friday, as producers struggle with weak demand.

Potash prices have fallen in the past year due to excessive mining capacity and reduced demand in key markets. Dry weather has limited crop production in India and a new Chinese tax and weak economy in Brazil also have hampered sales.

Colonsay has higher production costs than Mosaic’s other Saskatchewan mines. In September, Mosaic said it would curtail production there due to delayed fertilizer purchases in Brazil and North America.

The cuts to unionized jobs are permanent and due to “current market conditions,” Mosaic representative Sarah Fedorchuk said. They take effect immediately.

“The silver lining behind production cuts and layoffs is that (Mosaic) believes the market is salvageable with some incremental discipline,” Scotiabank analyst Ben Isaacson said in a note to clients. “If anything, we see it as positive.”

Mosaic continues to expand its Esterhazy, Saskatchewan potash mine.

Mosaic shares gained 0.7 percent to $35.42 on the New York Stock Exchange.

ICL Israel Chemicals Ltd's ICL.TA chief executive on Thursday said China and India were seeking discounts on their next contracts with potash suppliers.

Mosaic, Potash Corp of Saskatchewan POT.TO and Agrium Inc AGU.TO sell potash to those markets through their company Canpotex Ltd.