Stelco rejects Ottawa's legal threat, says up to 500 layoffs will proceed

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Stelco president and general counsel Paul Simon wrote to federal Industry Minister Mélanie Joly on October 9, rejecting Ottawa's claim that the company's planned layoffs breach binding employment commitments under the Investment Canada Act. The letter, obtained by CBC News and reported by The Globe and Mail on October 10, confirms Stelco will proceed with the cuts.

“Your representation that Stelco's planned layoffs cause it to breach its undertakings is false,” Simon wrote. He argued the undertakings do not expressly prohibit layoffs or require a specific headcount on each day of the five-year period, and that under the Act's guidelines, changes in circumstances may necessitate non-enforcement or renegotiation. A spokesperson for Joly confirmed the letter was received.

On October 5, Joly had issued an ultimatum giving the company five business days to submit a compliance plan. She said Cleveland-Cliffs, in its C$3.4-billion acquisition of Stelco in 2024, committed to maintaining at least the same number of unionized employees in Canada for five years, and that the commitments remain binding regardless of business strategy or market conditions. Non-compliance could bring a superior-court application seeking a compliance order, monetary penalties, or even a forced sale of the business. Joly also argued the company cannot treat U.S. tariffs as force majeure when Cleveland-Cliffs CEO Lourenco Goncalves has publicly backed those tariffs.

Stelco announced on September 28 that it would indefinitely idle cold-rolled and coated operations at its Hamilton Works and concentrate production at Lake Erie Works in Nanticoke, citing U.S. steel tariffs. The wind-down began October 9 and affects up to 500 employees (the United Steelworkers' Local 1005 estimates about 350 steelworkers). There is precedent: in 2009 Ottawa took Stelco's then-owner, U.S. Steel, to court over similar employment undertakings; the case was settled in 2011.