Stelco owner could be forced to sell Canadian assets over layoffs, Joly says
The federal government says the layoffs of up to 500 workers breach commitments made under the Investment Canada Act.
OTTAWA — Federal Industry Minister Mélanie Joly says Stelco's U.S. owner could be forced to sell its Canadian assets if a court finds it broke legal commitments by laying off hundreds of workers in Ontario.
"A court process can lead to financial penalties, forcing them to abide by their commitment, and also a forced divestiture," Joly told reporters in Ottawa on Wednesday.
"Everything is on the table."
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U.S. steelmaker Cleveland-Cliffs, which owns Stelco, announced last month it was idling parts of its Hamilton operation and cutting up to 500 jobs in Hamilton and Nanticoke, Ont.
The federal government says the move breaks commitments Cleveland-Cliffs made under the Investment Canada Act when it bought Stelco in 2024, including a pledge to protect jobs.
"We expect Stelco to follow the undertakings they've committed to the government of Canada," Joly said.
"And right now a business decision, or even a change in market conditions, cannot be used to not follow the commitment."
In a letter to Joly last Friday, Stelco president Paul Simon said the company was not in violation of its commitments.
He cited changing market conditions, including 50 per cent tariffs from U.S. President Donald Trump, for the decision to cut jobs.
"The state of Canada-U.S. trade, including 50 per cent tariffs applied to Stelco's products in an important export market for Canadian cold-rolled and coated steel, together with the Government of Canada's response to these trade measures ... is emblematic of an entirely different economic order facing the industry than at the time Stelco's undertakings were given," Simon wrote.
He argued the government's own guidelines mean Stelco should not be held liable for decisions made due to circumstances beyond its control.
Cleveland-Cliffs CEO Lourenco Goncalves has said he is prepared to immediately call back laid-off workers if Ottawa can reach a "Fortress North America" trade pact with the U.S.
Union leaders welcomed Joly's tough stance but worry a legal fight will take too long.
"(Cleveland-Cliffs) told us there'd be basically no job losses, no layoffs, for five years," said Ron Wells, president of United Steelworkers Local 1005.
"So, we're glad that the government has started the process. However, that's going to be a long, drawn-out process if they take them to court. Our members, they want to get back to work now."
Wells said he was open to the idea of Cliffs selling Stelco and hopes Ottawa nationalizes the company.
"If divestment is one of the options, so be it. It would probably be better for Canada if we have a nationalized steel company," he said.
Marty Warren, head of the Canadian division of the United Steelworkers, praised Joly's approach.
"I support what she said. I think it's a good approach," Warren said, adding that Stelco's operations would be an attractive package for other steel companies.
Conservative MP Ned Kuruc said the government is not moving quickly enough to stop the layoffs.
"The hundreds of workers being laid off don't have 10 months to wait," said Kuruc, MP for Hamilton East, Stoney Creek.
"Their mortgage payment is at the end of the month, their grocery trip is this weekend, and Christmas planning is happening right now."
Joly had issued Cleveland-Cliffs an ultimatum on Oct. 5 to map out a compliance plan within five business days or face possible legal action.
The government approved Cliffs's $3.4-billion acquisition of Stelco in 2024 with legally binding conditions, including maintaining unionized employee levels in Canada for five years.
Yadude Books reported in October that Stelco's president said Canadian exports of some steel to the U.S. had fallen 58 per cent.
There is precedent for Ottawa to sue a steelmaker over such commitments.
After U.S. Steel acquired Stelco in 2007 and later laid off workers, the federal government sued. A settlement was reached in 2011 with new commitments on production and investment.
With files from BNN Bloomberg, Global News and Toronto Star