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Industry Minister Mélanie Joly is giving the American parent company of Hamilton-based Stelco 15 days to reverse layoffs before turning to the courts.
In a “demand letter” sent to Ohio-based Cleveland-Cliffs on Thursday, Joly says the company is violating its commitments under the Investment Canada Act.
“In the event Cliffs fails to comply with this demand, the Minister may, pursuant to section 40 of the Act, make an application to a superior court,” the letter, obtained by Radio-Canada, reads.
Joly indicates that if the government proceeds with legal action, it would be asking the courts to issue monetary penalties against Cleveland-Cliffs and potentially direct the company to divest from Stelco.
“I remain prepared to sit down with Cleveland-Cliffs to find a solution. But our bottom line is clear: protect Canadian jobs, defend our steel industry and ensure that commitments made to Canada are respected,” Joly said in a statement.
Industry Minister Mélanie Joly answers questions from reporters in Ottawa on Oct. 14. (Justin Tang/The Canadian Press)
Cleveland-Cliffs said late last month that it plans to lay off as many as 500 workers as it idles certain steel production at Stelco, a move the federal government says violates “binding commitments” made when it bought the company in 2024.
The federal government has said the company’s purchase of Stelco included promises to employ “at least the same number of unionized employees and the vast majority of non-unionized employees” as there were in 2024 through 2029.
The company said the planned layoffs are in order to “ensure the survival” of the company, as U.S. tariffs on steel squeeze its sales. But Joly has dismissed that reasoning.
“Let me be clear: no act of god or change in market conditions can relieve Cleveland-Cliffs of the commitments it made to Canada. Those commitments are not optional,” she said in her statement.
Joly previously issued an ultimatum to the company to share a plan to avoid the layoffs or risk legal action. But the company rebuffed the government’s claim that it is in violation of its 2024 agreement.
An animation GIF shows an industrial worker walking near Stelco Hamilton Works; signage outside the plant; and a bird’s-eye view of the steelmaker with the Lake Ontario and the Toronto skyline in the distance, on Oct. 9 (Evan Mitsui/CBC)
“Your representation that Stelco’s planned layoffs cause it to breach its undertakings is false,” Paul Simon, president and general counsel at Stelco Inc., wrote in a letter to Joly earlier this month.
Despite the company insisting the layoffs are required to ensure its survival, Cleveland-Cliffs said just days ago that Stelco’s third quarter this year was its “strongest” since it acquired the Hamilton plant.
“Third quarter was Stelco’s strongest … since we acquired the company two years ago. The Canadian hot-rolled market has improved substantially,” Cleveland-Cliffs CEO Lourenco Goncalves said in a statement on Monday.
If the federal government proceeds to take Cleveland-Cliffs to court, it won’t be the first time Stelco has been at the centre of a legal battle. In 2009, Industry Canada sued Stelco’s previous owner, U.S. Steel, over job protection. The matter was settled out of court in 2011.
