Ottawa is contemplating various legal avenues against the American owner of Stelco after the company refused the government’s request to stop planned job cuts at the Hamilton steel producer, according to Federal Industry Minister Mélanie Joly. Joly, speaking in Ottawa, mentioned that the government is evaluating a communication from Cleveland-Cliffs and is resolute in enforcing the job commitments the company agreed to when it acquired Stelco in 2024.
“We anticipate Stelco to honor the promises they have made,” stated Joly. “At this moment, a business decision or changes in market conditions cannot be used as reasons to deviate from their commitments.”
Joly highlighted that the government is exploring possibilities under Section 40 of the Investment Canada Act, which may encompass financial penalties, a legal decree mandating compliance with commitments, or an order to divest its Canadian assets.
“All options are being considered.”
The minister refrained from declaring whether the government would initiate legal proceedings or providing a timeline for a decision. She noted that Ottawa is maintaining communication with the company and the union representing Stelco employees.
“I am willing to engage with the company to find a resolution, but we are exploring all available avenues to safeguard jobs in Canada,” Joly remarked.
She characterized the situation at the Hamilton steel mill as “unacceptable.”
The remarks follow Cleveland-Cliffs CEO Lourenco Goncalves stating that the company would proceed with layoffs despite Ottawa cautioning that the cuts might breach the terms of its Stelco acquisition.
Cleveland-Cliffs had agreed to retain at least the same number of unionized workers, as well as most non-unionized employees, for five years post its acquisition announcement in 2024.
Goncalves has challenged the government’s interpretation of those commitments, asserting that the agreement does not mandate the company to sustain employment levels daily throughout the five-year period. He described the layoffs as temporary, indicating that the jobs would return once a trade agreement is reached between Canada and the United States.
The company also cited U.S. President Donald Trump’s 50% tariffs on Canadian steel as a contributing factor behind its decision.
Layoffs are already in progress, stated Ron Wells, president of United Steelworkers Local 1005, representing Stelco workers. Wells disclosed that 90 workers were laid off last week, with an additional 85 anticipated to lose their jobs by the week’s end. Further layoffs are expected in the ensuing weeks.
The union estimated that 300 to 350 positions could be eliminated in Hamilton, with potential additional layoffs at Stelco’s Lake Erie Works in Nanticoke, Ontario.
Wells contended that Cleveland-Cliffs is breaching its job commitments and urged the federal government to pursue legal action. He cautioned that the repercussions could extend beyond the steelmaker, affecting other manufacturers reliant on Stelco’s products.
“The steel industry is crucial to the supply chain,” Wells emphasized, cautioning that disruptions could impact businesses producing a range of items from appliances and garden sheds to automotive products.
The discord has sparked calls for public ownership of Stelco. Federal NDP Leader Avi Lewis and Ontario NDP Leader Marit Stiles have advocated for the federal government to nationalize Stelco, contending that court proceedings might be too protracted to safeguard workers and Canada’s steel manufacturing capacity.
Stiles has urged Ontario Premier Doug Ford to collaborate with Ottawa to pursue public ownership and Canadian management, while pressing the province to offer tariff relief and adopt a “Buy Ontario First” procurement strategy.
Prime Minister Mark Carney had previously mentioned that the government would take appropriate action following the assessment of the company’s response to Joly’s demand.
