Aug 20 (Reuters) - Canadian miner Iamgold Corp has dismissed 325 contractors from its Rosebel gold mine in Suriname while it works to restore security after a clash between illegal miners and police, a company spokeswoman said on Tuesday.

The mining industry is grappling with a rising number of illegal miners, also known as artisanal miners, who break into sites in search of metals. At least 43 illegal miners died at a Glencore facility last month in Congo after a landslide.

Toronto-based Iamgold said earlier this month it had suspended mining operations at Rosebel after 25-year-old Furgill Aloeboetoe gained access to the site and died following an incident with police. Police later confirmed he was shot.

Some heavy-haul equipment at the mine was set on fire after Aloeboetoe died. An investigation is ongoing.

The company continues to process stockpiled material at its mill, but has lowered its full-year production guidance to between 765,000 to 810,000 ounces of gold, owing partly to reduced output at Rosebel.

Any restart hinges on talks with the government to increase security at the site, company spokeswoman Indi Gopinathan said on Tuesday.

"What we need is assurances that we don't have another incident like this occur," she said.

The mine in the small South American country is a frequent target for illegal prospectors. Gopinathan said Iamgold permits some artisanal miners to work on the concession, but not all.

The site is especially dangerous because illegal miners prospect in between normal production activities and sometimes abuse employees, said Lloyd Read of the local Rosebel Gold Mines Employees Organization, a labor union.

"The government is taking this issue very seriously and wants to resolve it," Suriname's labor minister, Soewarto Moestadja, told the country's parliament on Tuesday. (Reporting by Jeff Lewis in Calgary; additional reporting by Ank Kuipers in Paramaribo; editin g by Ernest Scheyder and Rosalba O'Brien)