Minister of Industry Mélanie Joly speaks during National Defence: Mapping Canada’s growth strategy, an event held by the Globe and Mail in Ottawa, on Wednesday.Justin Tang/The Canadian Press
U.S. steelmaker Cleveland-Cliffs, owner of Stelco Inc., could face financial penalties or be forced to divest its Canadian operations if it proceeds with hundreds of layoffs in Ontario, Industry Minister Mélanie Joly said Wednesday.
Stelco announced on Sept. 28 that it was laying off up to 500 workers in Hamilton and Nanticoke, Ont., saying it couldn’t compete in the galvanized steel market as a result of the trade war with the United States. Ottawa considers these layoffs a breach of commitments that the steelmaker made when it acquired Stelco.
The Industry Minister told reporters that she’s not backing down and that she expects Stelco to uphold its commitments.
Ms. Joly spoke after a fireside chat at The Globe and Mail’s defence summit in Ottawa. “Right now, a business decision or even a change in market conditions cannot be used to not follow the commitment,” Ms. Joly said.
Earlier this month, Ms. Joly warned that she would invoke the “full force of the law” to enforce those obligations.
Stelco says it is proceeding with Ontario layoffs after Ottawa issues ultimatum
When the federal government approved Cliffs’s $3.4-billion acquisition of Stelco in 2024, it imposed legally binding conditions, including that it maintain at least the same number of unionized employees in Canada for five years, as well as the vast majority of non-unionized workers.
Cliffs did not immediately respond to a request for comment.
Stelco informed Ottawa in a letter sent Friday that it is not in violation of its Investment Canada Act (ICA) job commitments, and it is proceeding as planned with hundreds of layoffs in Canada.
Ms. Joly said Ottawa is reviewing the letter.
“But let me be clear: Under Section 40 of the Investment Canada Act, a few possible outcomes of a court process can lead to financial penalties towards the company, forcing them to abide by the commitment, and also a forced divestiture, so forcing them to sell their Canadian assets,” Ms. Joly said.
“Everything is on the table, and so therefore I’m always open to sit down with the company and find a solution, but we’re looking at everything that is possible to keep jobs in Canada.”
Stelco’s exit from galvanized steel leaves big Canadian buyer baffled and in the lurch
On Oct. 5, Ms. Joly had issued the Ohio-based steelmaker an ultimatum to map out a plan within five business days for complying with its employment guarantees under the Investment Canada Act or possibly face legal action.
In the company’s response letter, obtained by The Globe and Mail, Stelco president and general counsel Paul Simon said the company wasn’t in violation of its ICA commitments, citing a legal provision around the promises and the government’s own guidelines under the act.
He said the undertakings did not stipulate a commitment to avoid layoffs at Stelco. In addition, the promise around maintaining job levels did not apply to every single day of the five-year period, he said.
Cliffs CEO Lourenco Goncalves said he is prepared to immediately call back laid-off workers at Stelco if Ottawa can reach a “Fortress North America” trade pact with the U.S.
The 50-per-cent U.S. tariff imposed on Canadian steel last year means Cliffs can no longer profitably sell galvanized steel into that market, Mr. Goncalves said.
Last year, Ottawa cracked down on the dumping of foreign steel into Canada below normal prices through the imposition of tariff-rate quotas, and it has mandated that publicly funded projects use Canadian steel wherever possible.
Opinion: The steel jobs may never come back. Ottawa should consider nationalizing Stelco
However, Mr. Goncalves maintains that the Canadian government hasn’t done enough to reduce foreign dumping of galvanized steel in the country, which he says is hurting Stelco’s ability to compete in the domestic market.
Ron Wells, president of United Steelworkers Local 1005, 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.
“Steel is essential to the supply chain and for national security. We wouldn’t be dependent on a multinational foreign corporation controlling our steel destiny.”
The Conservative opposition in Ottawa said Ms. Joly should already have taken action by suing Stelco, procuring court orders against Cleveland-Cliffs including penalties and, where warranted, pursuing a court-ordered sale with the goal of securing a Canadian buyer.
Cleveland-Cliffs boss dismisses idea of nationalizing Stelco as Ottawa pushes to preserve jobs
“The hundreds of workers being laid off don’t have 10 months to wait,” Ned Kuruc, Conservative member of Parliament for Hamilton East—Stoney Creek, said in a statement Wednesday.
“Their mortgage payment is at the end of the month, their grocery trip is this weekend, and Christmas planning is happening right now.”
The MP said Ottawa needs to uphold the deal it signed.
“The Liberals approved the Stelco takeover on the strength of their job guarantees. Now they must enforce them,” Mr. Kuruc said.
There is precedent for Ottawa to sue, and it revolves around an earlier iteration of the same Canadian steelmaker. After U.S. Steel Corp. acquired Stelco in 2007, it made commitments under the Investment Canada Act around jobs and production levels. After the financial crisis hit in 2008, U.S. Steel laid off workers in Canada.
The federal government then sued the company for allegedly reneging on its legally binding commitments. A settlement was reached in 2011, with U.S. Steel agreeing to a new set of commitments, including around production levels and investment in Canada.