Industry Minister Joly threatens fines and a forced asset sale if Cleveland-Cliffs won’t honour its ICA job pledges
The Canadian federal government has formally served Ohio-based Cleveland-Cliffs Inc. with a legal ultimatum over the Stelco layoffs, giving the American steelmaker 15 days to reverse up to 500 job cuts at its Ontario facilities or face court action – including monetary penalties and a potential forced sale of its Canadian assets.
Industry Minister Mélanie Joly sent a demand letter to Stelco’s general counsel Thursday, alleging the company has violated binding undertakings made under the Investment Canada Act (ICA) when Cleveland-Cliffs acquired Stelco Holdings Inc. for approximately $3.4 billion in 2024, CBC News reported. The action escalates a standoff that has been building since September, and one whose outcome now has significant implications for employment law and workforce management across Canada.
“As we stand right now, the business is still taking steps to lay off 500 workers,” Joly said in the letter. “Despite being given multiple opportunities, Cleveland-Cliffs has repeatedly failed to demonstrate that they are compliant with their undertakings. That is unacceptable.”
A dispute over galvanized steel and market conditions
The conflict is rooted in a deteriorating market for galvanized steel – a zinc-coated product widely used in construction and automotive manufacturing. Cleveland-Cliffs moved to temporarily lay off up to 500 steelworkers at Stelco operations in Hamilton and Nanticoke, Ont. on Sept. 28, citing the impact of elevated U.S. tariffs on galvanized steel.
In a seven-page letter to Joly obtained by The Canadian Press and published Oct. 13, Stelco president Paul Simon defended the cuts, arguing that the ICA undertakings do not prohibit temporary layoffs and do not require that employment levels remain above a fixed number every day during the five-year commitment period. Simon cited a 58 per cent decline in Canadian exports of cold-rolled and coated steel to the U.S. from pre-trade-war levels, noting that shipment volumes dropped by approximately 226,000 tonnes in the second quarter of 2026 compared to the 2024 quarterly average. As HRD Canada has previously reported on the Cleveland-Cliffs CEO’s defence of idling the Hamilton plant, the company has consistently maintained that market forces – not bad faith – drove the decision.
Cleveland-Cliffs Chairman and Chief Executive Officer Lourenco Goncalves placed blame squarely on Canada during the company’s third-quarter 2026 earnings call on Oct. 19. “The last piece of the puzzle to be addressed by the Canadian government is galvanized steel,” Goncalves said on the call as reported by Manufacturing Dive . “And then we would be able to bring the workers back and restart production at the galvanized department in Hamilton, Ontario.” Melanie Joly has warned Cleveland-Cliffs the layoffs would go against its agreement. Goncalves has also described Ottawa’s legal threats as bullying and harassment, according to BNN Bloomberg.
Goncalves’ stance carries its own political complexity: United Steelworkers Locals 1005 and 8782, which represent Stelco workers at steel plants in Hamilton and Nanticoke, noted that Goncalves has publicly supported U.S. tariffs on Canadian steel, with his “fingerprints” on the 50 per cent tariffs. The federal government argues a company whose chief executive openly endorsed the very trade policies disrupting its Canadian operations cannot invoke those policies as a shield against its ICA obligations. Cleveland-Cliffs’ Q3 2026 financial results reported revenues of $5.6 billion and adjusted EBITDA of $612 million – its strongest quarter in three years. Despite the layoffs, Goncalves stated that approximately 2,000 Canadian jobs at Stelco remain active.
Federal and provincial governments aligned
On Wednesday, Prime Minister Mark Carney and Ontario Premier Doug Ford announced nearly $9 billion in combined support for Ontario’s steel and auto sectors, including a $5 billion Joint Steel Fund.
“When you make a commitment with the Government of Canada, you respect that commitment, and the government will hold companies to the responsibility,” Carney said at a press conference announcing the fund. He acknowledged room for negotiation, adding: “There’s also an opportunity, of course, for the company to respect their commitments, and of course we’re happy to sit down and work with them.”
Ford – who had publicly criticized Goncalves in 2025 for endorsing U.S. trade tariffs on Canadian steel – was direct. “You make a commitment, it’s a commitment. You don’t go back on your commitments,” Ford said. “I hate to say I was right, but I was right.”
What HR leaders in foreign owned organization should watch
The Stelco dispute has direct implications for HR executives in Canada, particularly those operating within foreign-owned companies that secured regulatory approval through acquisition-linked workforce commitments.
The Canadian government approved Cleveland-Cliffs’ takeover of Stelco in October 2024 on the condition that it maintain staffing levels for five years, protecting both unionized and non-unionized employees. Those undertakings were approved under then-Industry Minister François-Philippe Champagne. The central legal question now is whether a temporary operational layoff constitutes a breach of those commitments, or whether the commitment allows fluctuation provided headcount is restored within the five-year window.
This case is a live test of how enforceable workforce commitments made under foreign-acquisition approvals can be when market conditions shift. It’s also notable that, although Cleveland-Cliffs and the federal government differ on the company’s staffing obligations under the ICA agreement, employment standards obligations are separate.
The federal government’s launch of the Advanced Manufacturing Workforce Alliance in August 2026 signals recognition of the structural challenge as factory job cuts have hit near-crisis levels. Whether courts will enforce the employment guarantees embedded in the Stelco acquisition now falls to a 15-day deadline expiring in early November.
