Ottawa gives Stelco's U.S. owner 15 days to reverse 500 Hamilton layoffs — or face the courts

Ottawa has given Ohio-based Cleveland-Cliffs 15 days to reverse its planned layoffs of up to 500 workers at Stelco's Hamilton steel operations or provide hard evidence justifying them — or face legal action under the Investment Canada Act, Reuters and CBC News reported Thursday.

The ultimatum came in a demand letter sent Thursday morning by Industry Minister Mélanie Joly to Stelco president Paul Simon, after Cleveland-Cliffs announced in late September that it would indefinitely idle its cold-rolled and coated operations in Hamilton.

In a statement, Joly said the layoffs violate binding commitments Cleveland-Cliffs made when Ottawa approved its 2024 takeover of Stelco — commitments to employ at least the same number of unionized employees, and the vast majority of non-union employees, as in 2024 through 2029. "Let me be clear: no act of God or change in market conditions can relieve Cleveland-Cliffs of the commitments it made to Canada. Those commitments are not optional," Joly said. "I remain prepared to sit down with Cleveland-Cliffs to find a solution. But our bottom line is clear: protect Canadian jobs, defend our steel industry and ensure that commitments made to Canada are respected."

What Ottawa can do

The letter warns that under Section 40 of the Investment Canada Act, the minister can apply to a superior court if the company fails to comply. Joly would seek monetary penalties and could ask the court to order Cleveland-Cliffs to divest from Stelco, according to reporting on the letter by the Toronto Star. The Star reported the breach carries a fine of C$10,000 for each day the company is out of compliance.

According to Global News's account of the letter, the agreement committed Cleveland-Cliffs to keep unionized employment in Canada at no lower than 1,766 full-time equivalent positions through 2029, with non-unionized staffing at 90% of the prior year's level. Joly's letter quoted CEO Lourenco Goncalves's own words from the original business plan: "we have committed to no layoffs and to maintaining our Canadian management team."

Cleveland-Cliffs' response

The company denies it broke its promises. In an Oct. 9 response to Joly, Cleveland-Cliffs argued the undertakings "do not stipulate a commitment to avoid layoffs" and contain no daily-minimum employment thresholds over the five-year period, according to Global News. The company blames U.S. President Donald Trump's 50% tariff on Canadian steel for forcing the cuts, calling them necessary to "ensure the survival" of the company. CEO Lourenco Goncalves told the Wall Street Journal last week that a temporary reduction in headcount was needed as the company refocuses operations, Seeking Alpha reported.

The union is skeptical of the company's offer to place displaced workers at its Lake Erie Works in Nanticoke, Ont. — only about 40 such offers have materialized so far, Global News reported.

The tariff war's steel front

The Star's reporting on Joly's letter adds a sharper accusation: that Goncalves lobbied the U.S. government to impose heavy tariffs on Canadian steel and diverted production from Stelco to U.S. operations before the tariffs took effect. Goncalves has said publicly that his "fingerprints" were on the tariff increase, according to a summary of Global News's reporting.

The fight is the second round of Ottawa's steel-industry offensive this week: on Oct. 21, Prime Minister Mark Carney and Ontario Premier Doug Ford launched an $8.7-billion package for Ontario steel, autos and critical minerals — Serious Pick reported. A federal-provincial Joint Steel Action Fund of $5.22 billion leads the package.

The 15-day clock runs to roughly Nov. 6. If Cleveland-Cliffs doesn't comply, the federal government can take the case to court — the first major test of how far Ottawa will go to enforce foreign-investment job commitments during the trade war.