Stelco pushes back on Ottawa amid threats of legal action over layoffs

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

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

The Ontario-based steel manufacturer sent a letter responding to Industry Minister Melanie Joly after she sent a letter to Cleveland-Cliffs, the U.S.-based company which acquired 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, although the response was not initially shared publicly.

Stelco’s letter to Joly, which was written by the company’s president and general counsel, Paul Simon, was shared with Global News Monday via 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 in more recent communications dating back to July 2026,” the letter said.

“Our early September meetings with several senior government officials, including representatives from your office, led Stelco to believe that the government understood the market realities confronting Stelco’s Hamilton Works finishing lines.”

Stelco, like Algoma and other Canadian steel manufacturers have been hit hard by U.S. tariffs of 50 per cent on Canadian steel imports, which led to a steep decline in sales to U.S. customers. The company said these market conditions have forced it to layoff up to 500 workers.

Joly responded on social media on Oct. 10 after reportedly 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 upon as undertakings under the Investment Canada Act and do not cease to apply because of 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 U.S.-based Cleveland-Cliffs the go-ahead to purchase 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 maintaining the number of union jobs and the majority of non-union positions.

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

“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.

Stelco pushed back on Joly’s accusations in its letter, and said it “remains in compliance” with the undertakings in the agreement from 2024.

“Stelco submitted its annual report confirming its compliance with the employment undertakings in November 2025. That report highlighted that Stelco was facing significant challenges due to the unforeseen consequences stemming from unprecedented U.S. tariffs and Canada’s failure to advance an effective ‘Fortress North America’ trade regime,” the letter said.

“Your representation that Stelco’s planned layoffs cause it to breach its undertakings is false as the undertakings do not stipulate a commitment to avoid layoffs.”

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

In an exclusive interview with Global News from Sept. 30, Lourenco Goncalves, the chairman and CEO of Cleveland-Cliffs, said the company’s decision was purely market-driven and that financial incentives could not fix the fundamental issues.

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

“Until we reestablish that, there’s nothing we can do, nothing.”

The union representing the roughly 500 steel workers facing potential layoffs, USW Local 1005, said it was not consulted nor did it have an opportunity to review those undertakings in the ICA.

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

“Although we weren’t privileged to the signed agreement between Cliff’s and the Government, the response reeks of desperation as the original explanation of Stelco being victims of Trump’s steel tariffs wasn’t flying.”

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 such as this, Stelco should not be responsible for any non-compliance with its undertakings. 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