Cleveland Potash, at Boulby, has begun consultation with about 220 workers, with a further 140 contractor roles to be cut as well.
Parent company ICL UK described the move as "painful" and warned a similar number of jobs could go in 2018.
Middlesbrough South and East Cleveland Labour MP Tom Blenkinsop described it as "devastating news".
ICL UK cited a "reduction in the level of economically-feasible potash reserves at Boulby, which the company estimates will be depleted by 2018".
The plant, which currently employs about 1,100 people, will produce another fertiliser, called Polysulphate.
Peter Smith, executive vice President-Potash of ICL, said: "In recent months we encountered geological problems which have affected previously high-yielding areas of the mine.
"In addition, our exploration programme, validated by independent consultants, confirmed further geological difficulties, which means that we have only a very limited level of economically feasible potash reserves.
"The reality of our potash reserves running out by 2018 means that we must develop a new business strategy if we are to continue mining at Boulby."
ICL UK said it would invest ??20m this year in the site's infrastructure with a potential further ??20m to increase production of Polysulphate from an estimated 200,000 tonnes this year to one million tonnes by 2020.
Mr Blenkinsopp said: "It's truly devastating news for those miners and their families.
"It just seems to be everywhere you look, we are seeing huge amounts of redundancy in our industry and it's surely unprecedented, and all within the borough of Redcar and Cleveland."
Anna Turley, Labour MP for Redcar, said: "This is yet another blow to the community, who have already been subjected to thousands of job losses from the closure of SSI in Redcar in the last few weeks."

Richard Anthony Jones from Kansas was released from jail after witnesses said they could not tell the two men apart.
A judge ruled there was no evidence to keep him in jail.
Mr Jones said finding a photo of the other man - who as well as looking like him, shares the same first name - was a "needle in a haystack moment".
'I don't believe in luck, I believe I was blessed,' Mr Jones told the Kansas City Star.
So far no criminal case has been filed against his double - known only as Ricky - who gave evidence at Mr Jones's robbery retrial and denied committing the crime.
While not saying Ricky was responsible, the judge found that based on the new evidence, no reasonable juror would have convicted Mr Jones.
Mr Jones said that he began to despair that he would ever be released from jail after repeated efforts to appeal against his 19-year conviction for a 1999 robbery.
"All my appeals had been denied. It has been a rough ride," he said.
But in 2015 he told researchers from the Midwest Innocence Project - a group that aids wrongly convicted prisoners - about a man called Ricky he had heard about. Mr Jones had been told by fellow inmates that he looked identical to Ricky.
"When I saw the picture of my double it all made sense to me," he said.
Mr Jones had been convicted based mostly on eyewitness evidence.
There was no physical, DNA or fingerprint evidence that linked him to the crime.
The researchers found that not only did the other man bear an uncanny resemblance to Mr Jones, he lived near the scene of the crime in Kansas City, Kansas, whereas Mr Jones lived across the state line in Kansas City, Missouri.
Lawyers for Mr Jones also said he was with his girlfriend and her family at the time members of the public were robbed in a park.
They argued that police identity procedures 17 years ago were deeply flawed.
A lawyer working on his case said the team were "floored by how much" Mr Jones and his double looked alike.
Mr Jones told the Kansas City Star that he was now adjusting to life outside of jail and was happy to be back with his children.
Hundreds of jobs are set to be axed at a North East potash mine.
[NEXT_CONCEPT]
A US prisoner who spent 17 years in jail for a robbery he did not commit has spoken of his relief that researchers found his lookalike.