Ottawa has issued a five-day ultimatum to the U.S. owner of Stelco to provide a plan ensuring job retention at the Hamilton steelmaker or face potential legal consequences. Cleveland-Cliffs, based in Ohio, announced intentions to lay off up to 500 employees as it halts specific steel production at Stelco, contrary to binding commitments made during its 2024 acquisition. Industry Minister Mélanie Joly notified Stelco’s president, Paul Simon, of Ottawa’s readiness to pursue legal action under the Investment Canada Act to enforce the agreement.
Joly emphasized the government’s commitment to upholding obligations, stating that the Act allows for remedies in case of breaches, including court applications for compliance, divestiture, or financial penalties. She expressed hope that such measures would not be necessary. Cleveland-Cliffs acquired Stelco in a $3.4 billion deal, emphasizing national interests and workforce importance.
The company’s commitments include maintaining the same number of unionized and non-unionized employees as when the acquisition was announced. CEO Lourenco Goncalves justified the layoffs citing the Canada-U.S. trade war and the condition of selling steel to the U.S. as part of the deal. Prime Minister Mark Carney vowed to utilize all available powers against Cleveland-Cliffs, indicating a firm stance on enforcing legal obligations.
The potential legal actions stem from the company’s failure to meet undertakings outlined under the Investment Canada Act, which typically extend for five years post-takeover. Sandy Walker from Dentons highlighted that non-compliance could lead to demand letters followed by court intervention if necessary. In a similar past case, Industry Canada sued U.S. Steel, Stelco’s former owner, over job protection issues.
Stelco workers expressed disappointment and skepticism towards Cleveland-Cliffs’ ownership, hoping for a different experience. The company’s decision to lay off workers was partly attributed to competition from imported steel products. Meanwhile, Ontario’s government pledged over $200,000 in partnership with Ottawa to support steel and manufacturing workers in the Hamilton area through workforce training and career transition programs.
Goncalves expressed support for Trump’s Section 232 tariffs on steel and aluminum imports from Canada, emphasizing his backing for Canadian steelworkers. Despite the layoffs, Trump highlighted a steel investment plan in Iowa as evidence of tariff effectiveness. The situation remains tense as Ottawa pushes for job protection and Cleveland-Cliffs faces scrutiny over its business decisions.