Stelco has pushed back against accusations from the federal government that it breached commitments to preserve jobs, calling the allegations “false” and saying it “stands ready to protect its interests.” The dispute comes as the Ontario-based steel manufacturer begins laying off up to 500 workers at its Hamilton Works operations, and faces the threat of legal action from Ottawa if those positions are not preserved.
The company sent a letter to Industry Minister Melanie Joly after she wrote to Cleveland-Cliffs, the U.S.-based company that acquired Stelco in 2024, giving it five days to respond. Cleveland-Cliffs told Global News it sent a reply to Joly’s office on Oct. 9. Stelco’s letter, written by the company’s president and general counsel Paul Simon, said the government had “significant advance notice” of the impact of market conditions on its business, with communications dating back to July 2026, and that meetings with senior officials in early September had led the company to believe Ottawa understood the pressures facing its Hamilton Works finishing lines.
Stelco, along with other Canadian steelmakers such as Algoma, has been affected by U.S. tariffs of 50 per cent on Canadian steel imports, which the company said led to a steep decline in sales to U.S. customers and forced the layoffs.
Ottawa Says Commitments Still Apply
Joly responded publicly on Oct. 10, saying the Government of Canada continues to expect Stelco to meet its “legally binding commitments to employees,” which she said were agreed upon as undertakings under the Investment Canada Act and do not lapse because of changing business strategy or market conditions. She said her legal team was reviewing Stelco’s letter and that “all options are on the table.”
Canada approved Cleveland-Cliffs’ purchase of Stelco in 2024 under the Investment Canada Act, which regulates foreign takeovers. Joly said in her letter to Stelco that the approval was contingent on the new owner maintaining the number of union jobs and the majority of non-union positions, and that those conditions do not expire due to shifting business strategy or market conditions. She added this was “particularly relevant” given that Cleveland-Cliffs had cited trade disruptions while its chief executive publicly supported Section 232 tariff measures.
Company Maintains It Is In Compliance
In its letter, Stelco said it “remains in compliance” with the undertakings from the 2024 agreement, noting it submitted an annual report in November 2025 confirming compliance and highlighting challenges stemming from U.S. tariffs and what it described as Canada’s failure to advance an effective “Fortress North America” trade regime. The company said Joly’s characterization that the planned layoffs breach its undertakings is “false,” arguing the undertakings do not include a commitment to avoid layoffs.
When the layoffs were first announced last month, Prime Minister Mark Carney said the company had “betrayed” Canadian workers and said “there’s money on the table” to keep employees on the job. In a Sept. 30 interview with Global News, Cleveland-Cliffs chairman and CEO Lourenco Goncalves said the decision was purely market-driven and that financial incentives could not resolve the underlying issue. “There’s no market in Canada for the amount of galvanized steel we produce in Canada. We need to export… to the United States,” he said, adding, “Until we reestablish that, there’s nothing we can do, nothing.”
Union Says It Was Not Consulted
USW Local 1005, which represents the roughly 500 steelworkers facing potential layoffs, said it was never consulted on nor given the opportunity to review the undertakings made under the Investment Canada Act. Union president Ron Wells said the union had been assured by both Cleveland-Cliffs and the federal government that bargaining unit employment levels would remain unchanged for five years, meaning no layoffs. Wells said Stelco’s response “reeks of desperation” given that the company’s initial explanation focused on tariffs.
Stelco said in its letter that, given the information it has provided the federal government throughout the trade dispute and the government’s own guidelines, it should not be held responsible for any non-compliance with its undertakings, and reiterated it “stands ready to protect its interests consistent with the Investment Canada Act and its guidelines.” Global News said it sent requests for comment to both Stelco and Cleveland-Cliffs but had not received a response by publication.
This article references reporting from:
