About 330 workers have been laid off from the Colonsay, Sask., potash mine about 65 kilometres southeast of Saskatoon.

The Mosaic Company announced Wednesday morning it was suspending operations at the mine for the remainder of 2016.

Mosaic said in a statement about 330 employees had received temporary layoff notices while the company adapted to "challenging potash market conditions."

"Lower global potash demand and market prices require that we curtail production," said president and chief executive Joc O'Rourke.

"Idling Colonsay will enable us to meet our customers' needs while reducing our production costs."

It is understood about 32 employees will be retained for care and maintenance of the site.

Employees to be recalled in January

Sarah Fedorchuk, senior director of public affairs for Mosaic, said all 330 employees were paid in lieu of notice and they will be recalled on Jan. 3, 2017 when Mosaic anticipates the market will return to normal cycles.

Idling Colonsay will enable us to meet our customers' needs while reducing our production costs. - Joc O'Rourke

United Steelworkers Union representative Mike Pulak said contracted security staff on Wednesday morning ushered employees into boardrooms, where they were told the news.

He said workers were "dumbfounded" by the decision.

"We were entering into a shut-down mode with limited people working anyways and, you know, doing repairs and stuff that we have to do in the summer," he said.

"So everybody's been planning to do that and now we get hit between the eyes with this."

Contract offer voted down

The layoff notices were given just two days after the union at the Colonsay mine voted down Mosaic's latest contract offer.

Fedorchuk said they have been bargaining with the Colonsay union for over a year and the decision to lay off the workers had nothing to do with the offer being voted down on Monday.

"This kind of decision is a difficult one to make. There's a lot of thought and preparation that have to go into making a decision of this magnitude and it was not something that was reactionary and we did overnight."

Mosaic said its lower-cost Esterhazy and Belle Plaine mines, combined with current inventory, would allow it to meet its short-term potash supply needs.