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OTTAWA — The federal government has turned up the heat on the U.S. owner of Stelco Holdings Inc. over impending layoffs at the Hamilton, Ont.-based steel plant.
Industry Minister Mélanie Joly sent a letter to Stelco president Paul Simon on Monday expressing her “extreme disappointment” over the company’s plan to lay off up to 500 workers in response to U.S. tariffs and other market pressures.
Canada gave U.S.-based Cleveland-Cliffs the go-ahead to purchase Stelco back in 2024 under the Investment Canada Act, which regulates foreign takeovers.
Canada’s approval of the deal was contingent on the new owner maintaining the number of union jobs and the majority of non-union positions, Joly said.
Those conditions don’t expire just because “business strategy or market conditions have changed,” she wrote in the letter.
“This is particularly relevant here, where Cleveland-Cliffs has cited trade disruptions as affecting its operations at Hamilton Works, notwithstanding its chief executive officer’s public support for Section 232 tariff measures,” Joly said.
Lourenco Goncalves, the chief executive of Cleveland-Cliffs, has publicly supported U.S. steel tariffs, saying they are a “necessary step” to curb dumped steel imports.
In the letter, Joly said she wants to see Cleveland-Cliffs’ plan to comply with all undertakings of the original acquisition. She asked for a response within five business days or the government could consider legal action.
Ottawa could go to superior court, where a judge could order the company to meet its obligations, impose penalties or even order a sale of the business, Joly said. Neither Simon, who is also Stelco’s general counsel, nor parent company Cleveland-Cliffs responded to requests for comment Tuesday.
Lourenco Goncalves, the chairman and CEO of Cleveland-Cliffs, told Global News the company’s decision was purely market-driven and that financial incentives could not fix the fundamental issues. The company has not publicly responded to Joly’s letter.
Joly said Stelco has “explicitly chosen not to seek support” from government programs designed to preserve jobs and maintain operations.
The existence of Joly’s letter was first reported by the Toronto Star.
Ron Wells, president of United Steelworkers local 1005, which represents workers at Stelco’s Hamilton plant, said he is pleased the federal government acted “very swiftly.”
“They were very slow to react last time,” he said, referring to a previous dispute involving the steel mill under a different owner. “We actually had to lobby to get them to react.”
U.S. Steel began laying off hundreds of workers at the former Stelco operations in November 2008 and announced temporary shutdowns affecting another roughly 1,500 jobs the following March.
Then-industry minister Tony Clement issued a formal demand under the act in May 2009 — roughly nine weeks after the larger shutdown was announced.
In that case, Ottawa rejected the company’s explanation for falling short of its labour and production commitments and took U.S. Steel to court.
The case was ultimately settled in 2011 after the company agreed to a new set of undertakings.
However, the steel mill entered creditor protection in 2014 and was acquired by Bedrock Industries in 2017, returning to the Stelco name, before Cleveland-Cliffs bought the company in 2024.
“Cleveland-Cliffs knew exactly what they were agreeing to when they bought the place,” said Wells, who has worked at the Hamilton steel mill for 47 years.
“We’re hoping that they will recant the layoff,” he said. “But I’m not holding my breath.”
“They’ll drag this through court and try to provide their rationale for how this was out of their control. But they’re all in favour of the tariffs, so it’s contradictory.”
Business lawyer Nassira El Hadri said the government appears to have moved past asking Cleveland-Cliffs to justify the layoffs.
“They are not asking for an explanation,” said El Hadri, founder of Hadri Law in Toronto. “They’re saying, ‘You have to give us a plan on how you are going to comply.’”
If the company responds by simply reiterating that the layoffs are necessary because of U.S. tariffs, she said the dispute could end up in court.
Joly’s letter also goes beyond the jobs commitment, asking Cleveland-Cliffs for a plan outlining how it will comply with all of its undertakings, El Hadri said.
The government says Cleveland-Cliffs made a series of commitments when it acquired the Ontario steelmaker, including preserving jobs and the Stelco name, maintaining and expanding its Canadian operations, generating cost savings, broadening its customer base and supporting unionized steel jobs.
“These undertakings are not goodwill gestures,” El Hadri said. “They are binding.”
This report by The Canadian Press was first published Oct. 6, 2026.
— With files from Craig Lord in Ottawa.
Brett Bundale, The Canadian Press
