Stelco is pushing back on Ottawa amid threats of legal action over layoffs

Stelco has reportedly pushed back at accusations that it violated its agreement with the federal government, saying they are “false” and it “stands ready to protect its interests.”

This comes as Stelco begins to lay off hundreds of workers, and faces threats of legal action from the federal government if those jobs are not preserved.

The Ontario-based steelmaker sent a letter and Industry Minister Melanie Joly responded after she sent a letter to Cleveland-Cliffs, the US-based company that bought Stelco in 2024. She also gave the company five days to respond.

Cleveland-Cliffs told Global News it sent a letter in response to Joly’s office on Oct. 9, though the response was not initially shared publicly.

Stelco’s letter to Joly, written by the company’s president and general secretary, Paul Simon, was shared with Global News Monday through a source who asked not to be named.

“Through our regular contact, the government has had significant advance notice of the impact these unprecedented market conditions have had on our business, and more recent communications dating back to July 2026,” the letter said.

“Our meetings in early September with several senior government officials, including representatives of your office, led Stelco to believe that the government understands the market realities facing Stelco’s Hamilton Works closing lines.”

Stelco, like Algoma and other Canadian steelmakers have been hit hard by US tariffs of 50 percent on Canadian steel imports, which has led to a steep decline in sales to US customers. The company said these market conditions forced it to lay off up to 500 workers.

Joly responded on social media on October 10 after receiving the letter from Stelco.

“The Government of Canada continues to expect Stelco to meet its legally binding commitments to employees. These commitments were agreed as obligations under the Investment Canada Act and do not stop applying due to changing business strategy or market conditions,” said Joly in the statement.

“As our legal team reviews the Stelco letter, all options are on the table.”

Canada gave US-based Cleveland-Cliffs the go-ahead to buy Stelco back in 2024 under the Investment Canada Act (ICA), which regulates foreign takeovers.

Speaking in the letter to Stelco last week, Joly said Canada’s approval of the deal was contingent on the new owner retaining the number of union jobs and the majority of non-union positions.

Those terms don’t expire just because “business strategy or market conditions have changed,” she added.

“This is particularly relevant here, where Cleveland-Cliffs cited trade disruptions as affecting their operations at Hamilton Works, despite their Chief Executive Officer’s public support for Section 232 tariff measures,” Joly said.

Stelco pushed back on Joly’s allegations in its letter, saying it “remains compliant” with the obligations in the 2024 agreement.

“Stelco submitted its annual report confirming its compliance with the labor agreements in November 2025. This report emphasized that Stelco faced significant challenges due to the unforeseen consequences stemming from unprecedented US tariffs and Canada’s failure to promote an effective ‘Fortress North America’ trade regime,” said the letter.

“Your representation that Stelco’s planned layoffs will cause it to breach its obligations is false because companies do not make a commitment to avoid layoffs.”

When the layoffs were first announced last month, Prime Minister Mark Carney said the company was “betraying” Canadian workers and insisted “there is money on the table” to keep employees on the job.

In an exclusive interview with Global News on September 30, Lourenco Goncalves, the president and CEO of Cleveland-Cliffs, said that the company’s decision was purely market-driven and that financial incentives cannot fix the fundamental issues.

“I’m not closing, I’m not dismantling,” Goncalves said during a 10-minute phone call. “There is no market in Canada for the amount of galvanized steel we produce in Canada. We have to export … to the United States.”

“Until we re-establish that, we can do nothing, nothing.”

The union representing the roughly 500 steelworkers facing potential layoffs, USW Local 1005, said it had not been consulted nor had an opportunity to review those companies at the ICA.

“We were assured by both Cleveland Cliff’s and the federal government that bargaining unit job levels will remain the same for 5 years. In other words no layoffs,” said the union president Ron Wells in a statement.

“Although we were not privileged to the signed agreement between Cliff’s and the government, the response is of despair as the original explanation that Stelco victims of Trump’s steel tariffs will not fly.”

Stelco, in the letter to Joly, denied wrongdoing, and based on the information presented to the federal government throughout the trade war, and the government’s own guidelines, the company said:

“In a situation like this, Stelco cannot be held responsible for any non-compliance with its businesses. Stelco stands ready to protect its interests consistent with the Investment Canada Act and its guidelines.”

Global News sent requests for comment to Stelco and Cleveland-Cliffs, but neither responded by publication.

– With files from Global News’ Colin D’Mello and The Canadian Press

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