Canada Demands Cleveland-Cliffs Reverse Stelco Layoffs or Face Legal Action
Canadian Industry Minister Mélanie Joly has given U.S. steelmaker Cleveland-Cliffs 15 days to reverse planned layoffs of up to 500 workers at Stelco facilities in Ontario, warning that the cuts violate binding commitments made under the Investment Canada Act during the company's 2024 acquisition.
Canadian Industry Minister Mélanie Joly has issued a demand letter to Cleveland-Cliffs, the U.S. parent company of Stelco Inc., giving the firm 15 days to reverse planned layoffs of up to 500 workers at its facilities in Hamilton and Nanticoke, Ontario. The federal government asserts that the job cuts violate binding commitments made under the Investment Canada Act when Cleveland-Cliffs acquired Stelco in 2024.
According to the government, the specific commitment requires Cleveland-Cliffs to maintain an average aggregate annual unionized workforce of no less than 1,766 employees, alongside a minimum of 603 salaried employees, through 2029. Minister Joly warned that failure to comply could result in legal action seeking monetary penalties or a court order forcing Cleveland-Cliffs to divest from Stelco entirely.
Cleveland-Cliffs has argued that the temporary layoffs are necessary for the company's survival due to unforeseen market changes, specifically citing U.S. tariffs on steel. Stelco President Paul Simon contended that such changes in market circumstances allow for the non-enforcement or renegotiation of investment undertakings. The company also stated it has not breached the agreement because daily employment levels do not need to be identical to meet the terms.
However, the Canadian government disputes both the necessity and the unforeseeability of the tariffs. Minister Joly contends that the tariffs were foreseeable and pointed out that Cleveland-Cliffs CEO Lourenco Goncalves publicly stated he was "very happy" with the 50% U.S. tariffs on steel, claiming credit for influencing them. Furthermore, the government noted that Cleveland-Cliffs reported Stelco's third quarter as its strongest since the acquisition, contradicting claims that immediate layoffs are essential for survival.
Prime Minister Mark Carney weighed in on the dispute, stating that Cleveland-Cliffs had "betrayed" its Canadian workforce by proceeding with the layoffs. The standoff threatens potential legal battles and financial penalties against the Ohio-based company, while raising concerns about strained diplomatic and trade relations regarding steel tariffs between Canada and the United States.