Ottawa Repeats Legal Threat as Stelco Says Layoffs Will Proceed

Industry Minister Mélanie Joly says “all options are on the table” as Ontario steelmaker Stelco says it will proceed with planned layoffs despite the federal government’s threat of legal action over alleged violations of the U.S. company’s commitments under the Investment Canada Act.

Company president Paul Simon denied that the layoffs violated the Act in a letter to Joly as reported by media reports.

Simon wrote that the company’s commitments under the Act “do not stipulate a commitment to avoid layoffs, nor do they include a requirement that employment levels be above a certain amount on each day of the five years of the undertakings,” according to CBC.

Joly responded on Oct. 10 saying Ottawa still expects the company to “meet its legally binding commitments to employees.”

“As our legal team reviews the Stelco letter, all options are on the table,” she said.

Ohio-based Cleveland-Cliffs, which purchased Stelco in 2024, announced Sept. 28 that it planned to lay off up to 500 workers at its Hamilton and Lake Erie facilities due to the ongoing Canada–U.S. trade dispute and weak domestic demand for steel, particularly in the face of foreign steel imports.

Joly had said in a letter on Oct. 5 that the company’s proposal to lay off the workers would violate its commitment to maintain “at least the same number of unionized employees and the vast majority of non-unionized employees”—a commitment it made when Ottawa approved the $3.4 billion acquisition.

Cleveland-Cliffs chairman and CEO Lourenco Goncalves says he has advocated for protections against steel imports and restoring access to the American market for Canadian galvanized steel.

He says the laid off workers will be recalled if the United States and Canada can reach a deal on trade.

Goncalves said the Canadian market is too small to accommodate galvanized steel production from both Stelco and ArcelorMittal Dofasco, along with imports. He has said that the company’s purchase of the Canadian steelmaker was based on the understanding that it can sell the products in the U.S. market.

ArcelorMittal Dofasco, a subsidiary of ArcelorMittal, is also based in Hamilton, Ontario.

United Steelworkers (USW) Local 1005, which represents steelworkers in Hamilton, rejected statements from Cleveland-Cliffs, saying it was attempting to “shift blame for their own decisions onto ‘market conditions’ and the so-called ‘trade crisis.’”

Conservative Leader Pierre Poilievre on Oct. 9 said he is calling on Ottawa to sue Cleveland-Cliffs.

Poilievre made the statement while announcing a plan by the Conservatives that calls for eliminating the industrial carbon tax, cracking down on Chinese steel imports, accelerating liquefied natural gas projects, and negotiating a tariff-free trade agreement with the United States.

Hamilton Mayor Andrea Horwath has also expressed support for federal action against the company.

“These are good-paying jobs that support families, local businesses and our economy,” she wrote on social media on Oct. 6.

The Canadian Press contributed to this report.