UPDATE 2-Potash Corp workers strike after talks fail

(Adds company comment, additional background)

WINNIPEG, Manitoba, Aug 7 (Reuters) - Mediated talks between Potash Corp of Saskatchewan (POT.TO: Quote, Profile, Research, Stock Buzz) and the United Steelworkers failed on Thursday and the union said it was going on strike immediately.

The talks failed when the company refused to change an offer that had already been rejected by the 500 workers at the three mines in Saskatchewan, according to the union, which had warned it was prepared to walk out if no deal was reached.

No new talks are scheduled but Potash, the world's largest fertilizer maker, still believes its last offer can be the basis for a negotiated settlement, company spokesman Bill Johnson said.

"We hope to keep the lines of communications open," Johnson said.

Potash Corp is reaping record profits from the world's insatiable demand for fertilizer to boost yields of pricey crops, leaving the company and its competitors essentially sold out of potash at a time of sky-high prices.

Union members have said they want a bigger share of the profits, and the market conditions give them a strong bargaining position.

"The company has to realize it's not dealing with the same set of circumstances they have in the last four or five sets of bargaining" talks, said Roger Falconer, a union official.

The previous contract expired at the end of April and the workers have been in a legal strike position since late July.

Mediator Vic Pathe has met with both sides separately since Monday, but the face-to-face talks had begun on Thursday.

The company has said the offer rejected by workers would be the richest in the potash industry. Neither side has commented on specifics of the offer, but media reports have said it would boost pay by 27 percent to 35.6 percent over three years at one mine.

The three mines represent about 30 percent of the company's total production, but one of the facilities operates only during winter months and another was currently shut down for two weeks of summer maintenance, Johnson said.

Potash stock closed 31 Canadian cents lower at C$188.99 on the Toronto Stock Exchange on Thursday before the talks failed.

The stock plunged earlier this week to four-month lows following a broad sell-off in commodity markets. But it is still more than double what it was last year. ($1=$1.05 Canadian) (Reporting by Allan Dowd, Roberta Rampton; editing by Phil Berlowitz and Braden Reddall)