Ottawa has demanded that the American owner of Stelco, a steelmaker based in Hamilton, present a plan within five business days to ensure the retention of jobs at the company. Cleveland-Cliffs, headquartered in Ohio, recently announced intentions to lay off up to 500 employees and halt specific steel production operations at Stelco, actions 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 to Stelco’s president Paul Simon, emphasized the government’s readiness to pursue legal action under the Investment Canada Act to enforce the agreement. Joly stressed the significance of upholding commitments made by investors and highlighted potential remedies for breaches, including court intervention for compliance, divestiture, or financial penalties.
Cleveland-Cliffs acquired Stelco in a $3.4 billion cash-and-stock deal, prioritizing national interests and acknowledging workforce importance. The company’s obligations, as outlined by Joly, involve maintaining the same levels of unionized and non-unionized employees as when the acquisition was finalized.
CEO Lourenco Goncalves of Cleveland-Cliffs justified the layoffs citing the impact of the Canada-U.S. trade war on Stelco’s ability to sell steel to the U.S. market, a critical condition of the acquisition deal. Prime Minister Mark Carney affirmed Ottawa’s commitment to leveraging all available legal measures against Cleveland-Cliffs to ensure compliance.
The potential consequences for failing to meet foreign takeover commitments under the Investment Canada Act typically involve a demand letter from the minister for explanations followed by legal action if deemed necessary. Sandy Walker, from the law firm Dentons, explained the process and consequences of breaching such commitments.
In a similar historical context, Industry Canada previously sued Stelco’s former owner, U.S. Steel, in 2009 over job protection commitments, leading to an out-of-court settlement in 2011. Presently, the United Steelworkers express skepticism about Stelco reversing its layoff plans despite governmental pressure.
Ontario’s government pledged over $200,000 in collaboration with Ottawa through the Canada-Ontario Workforce Tariff Response to support steel and manufacturing workers in Hamilton. The initiative aims to assist workers in upgrading skills and transitioning to high-demand careers to combat the impact of external economic challenges.
Lourenco Goncalves has voiced support for Trump’s Section 232 measures imposing tariffs on Canadian steel and aluminum imports, emphasizing a balanced approach to trade and expressing solidarity with Canadian steelworkers. Meanwhile, Trump highlighted a significant investment in the steel industry as an outcome of the imposed tariffs on imported steel.