Ottawa has given the American owner of Stelco, a steelmaker in Hamilton, a deadline of five business days to present a plan for preserving jobs, or else face potential legal repercussions. Cleveland-Cliffs, based in Ohio, recently announced intentions to lay off up to 500 employees as it suspends certain steel production at Stelco, a move that the Canadian government deems a breach of commitments made during the company’s acquisition in 2024.
Industry Minister Mélanie Joly, in a letter to Stelco’s president, warned of possible legal action under the Investment Canada Act if the job maintenance agreement is not upheld. This act allows for remedies such as court orders for compliance, divestiture, or financial penalties in cases of commitment violations.
The acquisition of Stelco by Cleveland-Cliffs in a $3.4 billion deal aimed to prioritize national interests and workforce importance. The company was obligated to retain a specific number of unionized and non-unionized employees post-acquisition, as outlined in the agreement.
Despite Cleveland-Cliffs CEO Lourenco Goncalves justifying the layoffs due to the Canada-U.S. trade war impact on steel sales, Minister Joly emphasized that business strategies or market conditions do not nullify the committed obligations.
Prime Minister Mark Carney affirmed the government’s commitment to holding Cleveland-Cliffs accountable, with potential legal actions being considered. The situation mirrors past legal disputes, such as Industry Canada’s lawsuit against Stelco’s previous owner, U.S. Steel, over job protection promises.
While Stelco’s workforce faces uncertainty, a pledge of over $200,000 from Ontario’s government is set to support steel and manufacturing workers through skills enhancement and career transition programs. This initiative aims to counteract economic challenges and maintain competitiveness amidst external pressures.
Goncalves’ endorsement of Trump’s Section 232 tariffs on Canadian steel imports contrasts with the Canadian government’s stance, highlighting the complex dynamics influencing the steel industry. As the situation unfolds, the fate of Stelco’s workforce remains uncertain, prompting calls for legal intervention to safeguard jobs and industry stability.