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Stelco has rejected federal government accusations that it violated its legal commitments under the Investment Canada Act, calling the claims “false” and warning it will defend its position. The dispute comes as the Ontario-based steelmaker moves forward with plans to lay off up to 500 workers at its Hamilton Works facility, a decision that has drawn sharp criticism from Ottawa and the union representing affected employees.
Stelco Denies Breaching Federal Agreement
The company’s president and general counsel, Paul Simon, sent a letter to Industry Minister Melanie Joly pushing back on her accusations. In the letter, Stelco argued it “remains in compliance” with the employment undertakings it agreed to when U.S.-based Cleveland-Cliffs acquired the company in 2024. Stelco also said it submitted an annual compliance report in November 2025 confirming this position.
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The letter stated that Joly’s claim about the layoffs constituting a breach is incorrect. “Your representation that Stelco’s planned layoffs cause it to breach its undertakings is false, as the undertakings do not stipulate a commitment to avoid layoffs,” the letter read. Stelco also noted that the federal government had received significant advance notice of the challenges the company was facing, including meetings with senior government officials as early as September.
The company pointed to U.S. tariffs of 50 per cent on Canadian steel imports as the root cause of its difficulties. Those tariffs triggered a steep decline in sales to American customers, which Stelco described as “unprecedented market conditions.” Cleveland-Cliffs CEO Lourenco Goncalves echoed this position in an exclusive interview with Global News on September 30, saying the layoff decision was purely market-driven.
“I’m not shutting down, I’m not dismantling,” Goncalves said during the call. “There’s no market in Canada for the amount of galvanized steel we produce in Canada. We need to export to the United States. Until we reestablish that, there’s nothing we can do, nothing.”
Ottawa Stands Firm on Legal Commitments
Joly responded publicly on October 10 after receiving Stelco’s letter. She made clear the federal government expects the company to honour its obligations. “The Government of Canada continues to expect Stelco to meet its legally binding commitments to employees,” she said. “These commitments were agreed upon as undertakings under the Investment Canada Act and do not cease to apply because of changing business strategy or market conditions.”
Joly also confirmed that legal options remain on the table. Her office had previously sent a letter to Cleveland-Cliffs giving the company five days to respond. Cleveland-Cliffs told Global News it replied on October 9, though the contents of that response were not made public at the time.
Canada originally approved Cleveland-Cliffs’ purchase of Stelco in 2024 under the Investment Canada Act, which governs foreign takeovers of Canadian companies. As part of that approval, the new owner agreed to maintain union job levels and the majority of non-union positions. Joly stressed that those conditions remain binding. She also noted the contradiction in Cleveland-Cliffs citing trade disruptions as a reason for the cuts, while its CEO had publicly supported the Section 232 tariff measures that caused them.
Prime Minister Mark Carney also weighed in when the layoffs were first announced last month. He said the company had “betrayed” Canadian workers and insisted there was financial support available to keep employees on the job.
Union Says It Was Left in the Dark
USW Local 1005, the union representing the roughly 500 workers facing layoffs, said it had no opportunity to review the Investment Canada Act undertakings. Union president Ron Wells said members were given assurances by both Cleveland-Cliffs and the federal government that job levels would remain stable for five years.
“We were assured by both Cleveland-Cliffs and the Federal Government that bargaining unit employment levels would remain the same for five years. In other words, no layoffs,” Wells said in a statement. He also questioned the credibility of Stelco’s response, adding that the original explanation blaming Trump’s steel tariffs “wasn’t flying.”
Meanwhile, Stelco maintained in its letter that the government’s own guidelines and the information it provided throughout the trade dispute should shield it from any finding of non-compliance. “In a situation such as this, Stelco should not be responsible for any non-compliance with its undertakings,” the letter stated. “Stelco stands ready to protect its interests consistent with the Investment Canada Act and its guidelines.” Global News contacted both Stelco and Cleveland-Cliffs for comment, but neither responded before publication.
