Brazilian mining giant Vale SA says it is postponing a $3 billion potash project in Saskatchewan.

The huge mine was to be developed near Kronau, a small community southeast of Regina.

"We find ourselves in some challenging economic times today and we have reviewed the projects that we have on our plate, one of those being the Kronau project, and we have made a decision to postpone it for the time being," Cory McPhee, a Vale vice-president, said Thursday from Toronto.

Plans for a potash mine near Kronau, about 20 kilometres southeast of Regina, have been put on hold.

It was expected to produce up to 2.9 million metric tonnes of potash, a key ingredient in fertilizer, per year.

McPhee said Vale will continue working to secure a water source for the mine and on the project's environmental impact assessment.

But he said there is no firm timeline on when construction of the potash mine will begin.

"The project will still be part of our longer-term plans," he said.

"We have been in conversation with representatives of the Saskatchewan government and we impressed upon them that we still see some great opportunities for us in Saskatchewan. But this is one project that is going to take a little longer."

Vale has been producing potash in Brazil for about 16 years, but set its sight on becoming a major global player in the arena.

Saskatchewan Economy Minister Bill Boyd said the Vale pullback is an isolated incident amid generally strong potash mining activity in the province.

"These kinds of stories, we see them from time to time, people ramping up their investments, people putting on hold their investments. Almost always it's the result of something internally that's happening," Boyd said.

Potash Corp. puts production at Lanigan mine on temporary hold

The corporation's announcement came the same day that the Potash Corp. of Saskatchewan announced it will shut down its Lanigan potash mine for four weeks.

The inventory-related shutdown will run from Sept. 15 and Oct. 13, the company said on its website.

A few weeks ago Potash Corp. announced it was expecting strong global shipments for the rest of this year, with increased demand for potash in most major markets.

But the ongoing drought that's been ravaging the U.S. Midwest this summer has raised questions about future demand for fertilizer.

(With files from CBC News)