Ottawa has issued a deadline of five business days to the American owner of Stelco to present a plan ensuring the retention of jobs at the Hamilton steel manufacturer. Cleveland-Cliffs, based in Ohio, recently announced intentions to lay off up to 500 employees and halt certain steel production operations at Stelco, a move that the Canadian government deems a breach of the “binding commitments” made during the company’s acquisition in 2024.
Industry Minister Mélanie Joly, in a letter addressed to Stelco’s president Paul Simon, emphasized the government’s readiness to pursue legal action under the Investment Canada Act to enforce the agreement if necessary. Joly highlighted the significance of upholding obligations, stating that failing to comply could result in court interventions, including orders for compliance, divestiture, or financial penalties.
The acquisition of Stelco by Cleveland-Cliffs, valued at $3.4 billion in cash and stock, was framed as prioritizing national interests and recognizing the importance of the existing workforce. According to Joly’s correspondence, this acquisition included commitments to retain a similar number of unionized and non-unionized employees as at the time of the transaction announcement.
Cleveland-Cliffs CEO Lourenco Goncalves justified the layoffs as essential due to the impact of the Canada-U.S. trade war on Stelco’s ability to export steel to the U.S., citing it as a fundamental condition of the deal. Prime Minister Mark Carney pledged to utilize all available legal measures against Cleveland-Cliffs to ensure compliance with the commitments made during the acquisition.
The article also discusses the potential legal repercussions for failing to meet foreign takeover commitments under the Investment Canada Act, which typically extend for five years. Sandy Walker, an expert in competition and foreign investment law, explained the process of addressing breaches of these commitments, involving demand letters and potential court actions if satisfactory explanations are not provided.
In a separate development, the Ontario government announced a financial commitment of over $200,000 in collaboration with Ottawa through the Canada-Ontario Workforce Tariff Response to support steel and manufacturing workers in the Hamilton region. The funding aims to assist 75 workers and job seekers in enhancing their skills and transitioning to high-demand career paths, in response to economic challenges posed by external factors such as trade tariffs.
Goncalves has expressed backing for Trump’s Section 232 measures imposing tariffs on steel and aluminum imports from Canada, while emphasizing support for Canadian steelworkers. The article also touches upon Trump’s recent endorsement of a substantial investment plan by a U.S.-based steelmaker, Mesabi Metallics, signaling the perceived success of the administration’s tariffs on imported steel.
