Stelco Inc. owner Cleveland-Cliffs could face a forced divestment of assets or financial penalties if it proceeds with hundreds of layoffs in Canada, Industry Minister Mélanie Joly warns.
Stelco, which is owned by U.S. steelmaker Cleveland-Cliffs, said on Sept. 28 that it was laying off up to 500 workers in Hamilton and Nanticoke, Ont., saying it couldn’t compete in the galvanized steel market as a result of the trade war with the United States.
Ms. Joly has said these layoffs are a breach of the steelmaker’s commitments when it acquired Stelco and earlier this month warned she would invoke the “full force of the law” to enforce that agreement.
When the federal government approved Cliffs’s $3.4-billion acquisition of Stelco in 2024, it imposed legally binding conditions, including maintaining at least the same number of unionized employees in Canada for five years, as well as the vast majority of non-unionized workers.
Cliffs did not immediately respond to a request for comment.
Stelco informed Ottawa in a letter sent Friday it is not in violation of its Investment Canada Act job commitments, and it is proceeding as planned with hundreds of layoffs in Canada.
On Wednesday, the Industry Minister told reporters she’s not backing down and that she expects Stelco to uphold its commitments.
Ms. Joly spoke after a fireside chat at The Globe and Mail’s defence summit in Ottawa.
“Right now, a business decision or even a change in market conditions cannot be used to not follow the commitment,” Ms. Joly said.
She said Ottawa is reviewing the letter.
“But let me be clear: Under Section 40 of the Investment Canada Act, a few possible outcomes of a court process can lead to financial penalties towards the company, forcing them to abide by the commitment, and also a forced divestiture, so forcing them to sell their Canadian assets,” Ms. Joly said.
“Everything is on the table, and so therefore, I’m always open to sit down with the company and find a solution, but we’re looking at everything that is possible to keep jobs in Canada.”
On Oct. 5, Ms. Joly had issued the Ohio-based steelmaker an ultimatum to map out a plan within five business days for complying with its employment guarantees under the Investment Canada Act or possibly face legal action.
In the company’s response letter obtained by The Globe and Mail, Stelco president and general counsel Paul Simon said the company wasn’t in violation of its ICA commitments, citing a legal provision around the promises and the government’s own guidelines under the act.
He said the undertakings did not stipulate a commitment to avoid layoffs at Stelco. In addition, the promise around maintaining job levels did not apply to every single day of the five year period, he said.
Cliffs CEO Lourenco Goncalves said he is prepared to immediately call back laid-off workers at Stelco if Ottawa can reach a “Fortress North America” trade pact with the U.S.
The 50-per-cent U.S. tariff imposed on Canadian steel last year means Cliffs can no longer profitably sell galvanized steel into that market, Mr. Goncalves said.
Last year, Ottawa cracked down on the dumping of foreign steel into Canada through the imposition of tariff-rate quotas, and it has mandated that publicly funded projects use Canadian steel wherever possible. However, Mr. Goncalves maintains the Canadian government hasn’t done enough to reduce foreign dumping of galvanized steel in the country, which is hurting Stelco’s ability to compete in the domestic market.
