Industry Minister Mélanie Joly has given the American parent company of Stelco, based in Hamilton, a 15-day ultimatum to reverse recent layoffs before resorting to legal action. Joly sent a formal “demand letter” to Cleveland-Cliffs, headquartered in Ohio, stating that the company is breaching its obligations under the Investment Canada Act. The letter obtained by Radio-Canada mentions that failure to comply with the demand could lead to the Minister seeking court intervention, including potential financial penalties against Cleveland-Cliffs and potentially requiring the company to divest from Stelco.
Joly emphasized that while she is open to discussions with Cleveland-Cliffs to find a resolution, the priority remains protecting Canadian jobs, supporting the steel industry, and ensuring that commitments made to Canada are honored. Cleveland-Cliffs recently announced plans to lay off up to 500 employees at Stelco, citing the need to sustain the company amidst challenges from U.S. steel tariffs affecting sales. However, the federal government argues that these layoffs violate the specific commitments made by Cleveland-Cliffs when acquiring Stelco in 2024.
The purchase agreement between Cleveland-Cliffs and Stelco included pledges to maintain employment levels consistent with those in 2024 throughout 2029. Despite the company’s rationale for the layoffs being linked to its survival, Joly dismissed this justification, emphasizing that the commitments made by Cleveland-Cliffs to Canada are non-negotiable. Cleveland-Cliffs has been contacted for comment by CBC News.
Earlier, Joly had issued a warning to Cleveland-Cliffs, urging them to present a strategy to prevent the layoffs or face legal consequences. The company refuted the government’s claim of breaching the 2024 agreement. In response to Joly’s assertions, Paul Simon, president and general counsel at Stelco Inc., disputed that the planned layoffs were in violation of their commitments. Despite the company’s insistence on the necessity of layoffs for its sustainability, Cleveland-Cliffs reported that Stelco had its strongest third quarter performance since the acquisition of the Hamilton plant two years ago.
If the federal government proceeds with legal action against Cleveland-Cliffs, it will not be the first time Stelco has been involved in legal disputes. In 2009, Industry Canada sued the previous owner of Stelco, U.S. Steel, over job protection issues, which was later settled out of court in 2011.