Ottawa gives Stelco's U.S. owner 5 days to share plan to keep jobs

Stelco's facility in Hamilton is facing some 500 layoffs, which the federal government says violates an agreement the steelmaker's U.S. owner made in 2024. (Patrick Morrell/CBC)Social SharingOttawa has given the U.S. owner of Stelco five business days to share a plan to maintain jobs at the Hamilton steelmaker or face potential legal action.

Ohio-based Cleveland-Cliffs said last week it plans to lay off as many as 500 workers as it idles certain steel production at Stelco, which the federal government says violates "binding commitments" made when it bought the company in 2024.

In a letter to Stelco president Paul Simon on Monday, Industry Minister Mélanie Joly said Ottawa is prepared to seek a court ruling to enforce the agreement under the Investment Canada Act.

"The Government of Canada takes compliance with undertakings seriously," Joly wrote in the letter, obtained by CBC News on Tuesday.

"Where an investor fails to comply with an undertaking, the Act provides remedies for breaches, including an application to the superior court for orders that may include directing compliance, divestiture, or monetary penalties.

"I trust that such steps will not be necessary."

Cleveland-Cliffs acquired Stelco in a $3.4-billion cash-and-stock deal that, according to a news release at the time, kept "national interests at the forefront" and recognized the "importance of the workforce."

According to Joly's letter, this includes "undertakings to continue to employ at least the same number of unionized employees and the vast majority of non-unionized employees as were employed when the transaction was announced."

Cleveland-Cliffs CEO Lourenco Goncalves has said the cuts are necessary and justified by the Canada-U.S. trade war, arguing that Stelco's ability to sell steel to the U.S. was an "underlying condition" of the deal.

Prime Minister Mark Carney said last week Ottawa will "use all powers that we have" against Cleveland-Cliffs as it pursues the Ohio-based company to the "fullest extent of the law."