Ottawa gives Stelco’s U.S. owner five business days to show how it will keep its Hamilton job promises

The federal government has given Cleveland-Cliffs, the Ohio-based owner of Stelco, five business days to explain how it will honour the job commitments it made when it bought the Hamilton steelmaker, or face possible legal action. In a letter sent Monday to Stelco president Paul Simon, Industry Minister Mélanie Joly said Ottawa is prepared to ask a court to enforce the deal under the Investment Canada Act, CBC News reported on Tuesday. “The Government of Canada takes compliance with undertakings seriously,” Joly wrote. The letter was first reported by the Toronto Star, which said it went out Monday night.

The warning follows Cleveland-Cliffs’ announcement last week that it plans to lay off as many as 500 workers as it idles some production at Stelco. In an Oct. 1 letter to Joly, the United Steelworkers union said the company would indefinitely idle Stelco’s cold-rolled and coated operations, hitting members of USW Local 1005 in Hamilton and Local 8782 in Nanticoke, Ont. According to The Canadian Press, Joly’s letter expressed her “extreme disappointment” with the layoff plan, which the company has tied to U.S. tariffs and other market pressures.

At issue are promises Cleveland-Cliffs made to win approval of its $3.4-billion cash-and-stock purchase. In an Oct. 30, 2024, statement, then-industry minister François-Philippe Champagne said his approval was contingent on a package of binding undertakings lasting five years. They included keeping Stelco’s head office in Hamilton, continuing “to employ at least the same number of unionized employees and the vast majority of non-unionized employees” as when the deal was announced, honouring collective agreements and pension commitments, and making significant capital and research spending. The Star noted that the full text of the agreement has never been made public.

Joly argued that a tougher market does not let the company off the hook, writing that the commitments “do not cease to apply simply because business strategy or market conditions have changed.” She also pointed to the stance of Cleveland-Cliffs’ chief executive, Lourenco Goncalves, who has publicly backed U.S. President Donald Trump’s Section 232 tariffs, which put duties of up to 50 per cent on Canadian steel and aluminum. According to the Star, Joly also said Stelco had not sought help from federal programs designed to preserve jobs and keep operations running during the tariff war. Goncalves has said the cuts are justified by the trade war and that Stelco’s ability to sell steel into the U.S. was an “underlying condition” of the purchase, CBC reported.

The act gives Ottawa several options. Joly wrote that a breach can lead to an application to a superior court “for orders that may include directing compliance, divestiture, or monetary penalties,” adding, “I trust that such steps will not be necessary.” Sandy Walker, co-chair of the competition and foreign investment review group at law firm Dentons, told CBC that after a demand letter the company gets a chance to respond and, if the government is unsatisfied, the attorney general can take it to court. She said Cleveland-Cliffs could argue that circumstances beyond its control, possibly including U.S. tariffs, kept it from meeting the undertakings. The USW had urged Joly to issue a formal demand under section 39 of the act and to be ready to seek court enforcement under section 40.

Hamilton has been here before. U.S. Steel began laying off hundreds of workers at the former Stelco operations in November 2008 and announced temporary shutdowns affecting roughly 1,500 more jobs the following March, CP reported. Then-industry minister Tony Clement did not issue a formal demand until May 5, 2009, about nine weeks later, and Ottawa took the company to court before the case was settled in 2011 with new undertakings. The mill entered creditor protection in 2014 and was bought by Bedrock Industries in 2017 before Cleveland-Cliffs acquired it. Ron Wells, president of USW Local 1005, said Ottawa acted “very swiftly” this time. “They were very slow to react last time,” he told CP.

Wells does not expect the company to back down. “The bond of trust has been broken,” he told CBC, adding that he thinks the layoffs will go ahead and that a court-ordered divestiture would not be a bad outcome: “I don’t think it would be a bad thing to have a national steel company.” Prime Minister Mark Carney said last week that Ottawa will “use all powers that we have” against the company. Ontario, meanwhile, pledged on Tuesday to invest more than $200,000 with Ottawa through the Canada-Ontario Workforce Tariff Response to help steel and manufacturing workers in the Hamilton area, money the province said will help 75 workers and jobseekers upgrade their skills, CBC reported. CBC said it had asked Cleveland-Cliffs for comment.

Sources: CBC News; The Canadian Press via Global News; Toronto Star via St. Catharines Standard; Innovation, Science and Economic Development Canada, ministerial statement (Oct. 30, 2024); United Steelworkers letter to Minister Joly (Oct. 1, 2026).