The U.S. owner of Stelco has been given a five-day ultimatum by Ottawa to present a plan for preserving jobs at the Hamilton steel producer or face potential legal consequences. Cleveland-Cliffs, based in Ohio, recently announced intentions to lay off up to 500 employees and halt certain steel production at Stelco, which the Canadian government alleges breaches binding commitments made during its acquisition in 2024.
Industry Minister Mélanie Joly, in a letter to Stelco’s president Paul Simon, expressed readiness to pursue legal action under the Investment Canada Act if necessary to enforce the agreement. Joly emphasized the importance of upholding commitments and outlined potential remedies for breaches, including court orders for compliance, divestiture, or financial penalties.
The acquisition of Stelco by Cleveland-Cliffs in a $3.4 billion deal aimed to prioritize national interests and acknowledge the significance of the workforce. The company was obligated to maintain the same number of unionized and non-unionized employees as at the time of the transaction announcement, as outlined in Joly’s letter.
Cleveland-Cliffs CEO Lourenco Goncalves defended the layoffs, attributing them to the Canada-U.S. trade war and emphasizing Stelco’s dependence on selling steel to the U.S. Prime Minister Mark Carney pledged to utilize all available legal measures against Cleveland-Cliffs in response to the situation.
The Investment Canada Act enforces commitments for foreign takeovers, requiring acquiring companies to adhere to specified terms for at least five years following the transaction. Failure to meet these obligations may lead to government intervention and potential legal action, as seen in previous cases such as Industry Canada’s lawsuit against Stelco’s previous owner, U.S. Steel.
In a separate development, the Ontario government announced plans to invest over $200,000 in partnership with Ottawa through the Canada-Ontario Workforce Tariff Response to support steel and manufacturing workers in Hamilton. This funding aims to assist workers in upgrading skills and transitioning to high-demand careers, aligning with efforts to counter economic challenges posed by external factors like trade tariffs.