Canada Threatens Legal Action Against Stelco Over 500 Planned Layoffs
Canadian Industry Minister Mélanie Joly has warned steelmaker Stelco of potential legal action over plans to lay off up to 500 workers, alleging the move breaches commitments made under the Investment Canada Act when Cleveland-Cliffs acquired the company in 2024. Stelco denies wrongdoing, attributing the job cuts to U.S. tariffs that have severely reduced exports.
Canadian Industry Minister Mélanie Joly has threatened legal action against steel manufacturer Stelco over plans to lay off up to 500 workers, asserting that the move violates binding commitments made under the Investment Canada Act. The dispute centers on undertakings provided when Cleveland-Cliffs acquired Stelco in 2024, which included preserving jobs, maintaining the Stelco name, and keeping the company's head office in Hamilton.
Joly issued an ultimatum to the company in a letter sent on Oct. 5, giving Stelco five days to respond. She claimed the planned layoffs constitute a direct breach of those commitments. Joly also stated that Cleveland-Cliffs CEO Lourenco Goncalves supports U.S. steel tariffs, arguing this position prevents the company from claiming force majeure to excuse non-compliance.
Stelco responded with a letter dated Oct. 9, authored by company president Paul Simon. The steelmaker denied any wrongdoing and rejected the government's accusations as false. Stelco attributed the impending job losses to pressure from U.S. tariffs, noting that it would halt production at its Hamilton plant and concentrate operations at Lake Erie Works in Haldimand as a result. According to the company, exports of cold-rolled and coated steel to the United States have plunged 58 per cent from pre-trade-war levels. About a year-and-a-half ago, U.S. President Donald Trump levied tariffs on Canadian steel products of up to 50 per cent under Section 232 duties.
Stelco maintains that its undertakings do not prohibit layoffs caused by unforeseen market conditions such as these tariffs. Prior to the current dispute, the company submitted an annual report in November 2025 confirming compliance with its employment undertakings.
The federal government maintains that market conditions do not excuse the company from its obligations regarding job preservation and operations. Business lawyer Nassira El Hadri noted that the government is demanding a plan for compliance rather than just an explanation for the layoffs.
The conflict highlights a broader dispute over the interpretation of binding corporate undertakings versus market realities, carrying the threat of potential legal action by the federal government against Stelco and the loss of up to 500 jobs in the Canadian steel sector.