Canada reaffirms legal threat as Cliffs moves to cut jobs

Cleveland-Cliffs Inc.’s Canada-based Stelco unit informed Prime Minister Mark Carney’s government that it will move ahead with hundreds of layoffs, setting the stage for a legal fight as Ottawa signalled Saturday it won’t back down.

Stelco told Canadian Industry Minister Melanie Joly in a letter seen by Bloomberg News that the planned layoffs near Toronto don’t breach undertakings Stelco agreed to in 2024 to maintain its unionized workforce. The letter describes tariffs and the U.S.-Canada trade war as events beyond the company’s control.

“Given the extensive impact of external factors, Stelco cannot continue to produce cold-rolled and coated steel products without incurring significant losses that are not sustainable,” Stelco president and general counsel Paul Simon wrote in the letter, dated Oct. 9. “We will continue with the idling of Hamilton Works.”

Joly’s office confirmed receiving the letter from Stelco and signalled that Ottawa wouldn’t back down. Her spokesperson Mathis Denis said the Canadian government “continues to expect Stelco to meet its legally binding commitments to employees” and rejected the company’s reasoning for pressing ahead with the layoffs.

“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,” Denis said.

The minister this week threatened legal action against Cleveland-Cliffs, while Carney has called the move to cut jobs at facilities in Hamilton and Nanticoke a “betrayal” of workers.

Cliffs pledged when it acquired Stelco to maintain employment levels at the subsidiary, specifically promising to continue employing at least the same number of unionized workers.

The company said this week that the trade war between Canada and the U.S., including a 50 per cent tariff on steel products, is a change in circumstances.

Stelco will continue to operate its Lake Erie Works site as well as another facility in Hamilton and maintain employment levels at its local head office, according to the letter, which was first reported by the Globe and Mail.

“No one could have anticipated the application, let alone the impact, of the subsequent U.S. tariffs and the disruption it has caused,” Simon wrote. The tariffs were a change in circumstance that “may necessitate the non-enforcement or renegotiation of undertakings,” he said.

With assistance from Jacob Lorinc