Ottawa has given the U.S. owner of Stelco a five-day deadline to provide a plan for preserving jobs at the Hamilton steelmaker or face potential legal consequences. Cleveland-Cliffs, headquartered in Ohio, recently announced intentions to lay off up to 500 employees and halt specific steel production at Stelco. These actions, as per the federal government, breach the “binding commitments” made by Cleveland-Cliffs during its 2024 acquisition of the company.
Industry Minister Mélanie Joly, in a letter to Stelco’s president Paul Simon on Monday, emphasized Ottawa’s readiness to pursue legal action under the Investment Canada Act to enforce the agreement. The minister highlighted the government’s serious approach to upholding commitments and indicated potential remedies for breaches, including seeking court orders for compliance, divestment, or financial penalties.
Cleveland-Cliffs acquired Stelco in a $3.4 billion cash-and-stock deal, emphasizing the preservation of national interests and the significance of the workforce, according to a previous news release. The company is facing scrutiny for justifying the layoffs based on the Canada-U.S. trade war, with CEO Lourenco Goncalves asserting that selling steel to the U.S. was a crucial aspect of the deal.
Prime Minister Mark Carney affirmed Ottawa’s determination to utilize all available legal measures against Cleveland-Cliffs to ensure compliance with its obligations. The government’s actions stem from concerns that the company’s commitments remain in force irrespective of changing business strategies or market conditions.
The situation echoes a past legal dispute in 2009 when Industry Canada sued Stelco’s former owner, U.S. Steel, over job protection commitments, which was later resolved out of court in 2011. The current developments have led to uncertainty among Stelco workers and skepticism regarding the company’s decision to proceed with layoffs despite government pressure.
As the situation unfolds, potential legal actions under the Investment Canada Act could be pursued if Cleveland-Cliffs fails to adhere to its commitments. The government’s focus remains on safeguarding jobs and ensuring compliance with the terms outlined in the acquisition agreement.