Ottawa is exploring various legal avenues against the American owner of Stelco after the company refused the government’s request to stop planned job cuts at the Hamilton steel manufacturer, stated Federal Industry Minister Mélanie Joly on Wednesday. Joly, speaking to journalists in Ottawa, mentioned that the government is assessing a communication from Cleveland-Cliffs and is resolute in enforcing the job commitments made by the company upon acquiring Stelco in 2024.
“We anticipate Stelco to honor the promises they have made,” Joly remarked. “At present, a business decision or shifts in market circumstances cannot be used as reasons to deviate from their commitments.”
Joly indicated that the government is evaluating its options under Section 40 of the Investment Canada Act, which may involve imposing financial penalties, obtaining a court order to ensure the company complies with its commitments, or mandating it to divest its Canadian assets.
“All possibilities are being considered.”
The minister did not specify whether the government plans to initiate legal proceedings or provide a timeline for a decision. She noted that Ottawa is maintaining communication with both the company and the union representing Stelco workers.
“I am willing to engage with the company to find a resolution, but we are exploring all available avenues to preserve jobs in Canada,” Joly emphasized.
She characterized the situation at the Hamilton steel plant as “unacceptable.”
The remarks come after Cleveland-Cliffs CEO Lourenco Goncalves affirmed the company’s intention to proceed with layoffs despite Ottawa’s caution that the reductions could breach the terms of its Stelco acquisition.
Cleveland-Cliffs had agreed to retain at least the same number of unionized employees, as well as most non-unionized workers, for a five-year period following the acquisition announcement in 2024.
Goncalves challenged the government’s interpretation of these commitments, asserting that the agreement does not mandate the company to uphold employment levels daily throughout the five-year term. He explained the layoffs as temporary, stating that the jobs would be reinstated once a trade agreement is reached between Canada and the United States.
The company also cited U.S. President Donald Trump’s 50% tariffs on Canadian steel as a contributing factor to its decision.
Layoffs are already in progress, according to Ron Wells, president of United Steelworkers Local 1005, representing Stelco employees. Wells disclosed in an interview on CBC Radio’s “Metro Morning” that 90 workers were laid off last week, with an additional 85 expected to be let go by the week’s end. Further layoffs are anticipated in the subsequent weeks.
The union estimated that up to 350 jobs could be eliminated in Hamilton, with possible additional layoffs at Stelco’s Lake Erie Works in Nanticoke, Ont.
Wells argued that Cleveland-Cliffs is violating its job commitments and urged the federal government to pursue legal action. He cautioned that the repercussions could extend beyond the steelmaker, affecting other manufacturers reliant on Stelco’s products.
“Steel is a crucial part of the supply chain,” Wells emphasized, warning of potential disruptions to businesses producing various items ranging from appliances and garden sheds to automotive products.
The dispute has led to calls for public ownership of Stelco. Federal NDP Leader Avi Lewis and Ontario NDP Leader Marit Stiles urged the federal government to nationalize Stelco, contending that legal proceedings might be too protracted to safeguard workers and Canada’s steel production capacity.
Stiles additionally urged Ontario Premier Doug Ford to collaborate with Ottawa to pursue public ownership and Canadian management, advocating for tariff relief and endorsing a “Buy Ontario First” procurement approach.
Prime Minister Mark Carney had previously stated that the government would take appropriate actions after receiving and reviewing the company’s response to Joly’s demand.