Ottawa Gives Cleveland-Cliffs Five Days to Save Stelco Jobs or Face Legal Action
The Canadian government has issued a five-day ultimatum to U.S. steelmaker Cleveland-Cliffs to present a plan preserving jobs at its Hamilton plant, warning of potential legal action under the Investment Canada Act over planned layoffs of up to 500 workers.
Industry Minister Mélanie Joly has given Cleveland-Cliffs, the U.S. owner of Stelco Holdings Inc., five business days to provide a plan for maintaining jobs at the company’s Hamilton steel plant or face potential legal action. The ultimatum follows the company's announcement last week that it plans to lay off as many as 500 workers by idling certain steel production operations at the facility.
The federal government asserts that the planned layoffs violate binding commitments made when Cleveland-Cliffs acquired Stelco in a $3.4-billion cash-and-stock deal in 2024. Under the acquisition agreement, Cleveland-Cliffs was required to employ at least the same number of unionized employees and the vast majority of non-unionized employees as were employed when the transaction was announced. Foreign takeover commitments under the Investment Canada Act typically extend for five years.
Cleveland-Cliffs CEO Lourenco Goncalves justified the cuts by citing the Canada-U.S. trade war, arguing that Stelco's ability to sell steel to the U.S. was an underlying condition of the deal. However, the government maintains that market changes do not nullify these employment undertakings. Prime Minister Mark Carney stated that Ottawa will use all available powers against Cleveland-Cliffs to enforce the law. Under the Investment Canada Act, remedies for non-compliance include court orders for compliance, divestiture, or monetary penalties.
Concurrently, Ontario’s government pledged to invest more than $200,000 alongside Ottawa through the Canada-Ontario Workforce Tariff Response to help protect steel and manufacturing workers in the Hamilton area. The funding is intended to help 75 workers and jobseekers upgrade their skills and transition to in-demand careers.
This is not the first time the federal government has pursued legal action over job protections at the Hamilton plant. In 2009, Industry Canada sued Stelco's previous owner, U.S. Steel, over job protection. That case was settled out of court in 2011.