Ottawa threatens legal action as Stelco layoffs deepen concerns over Canadian steel industry

HAMILTON— The federal government is considering legal action against American steelmaker Cleveland-Cliffs over plans to eliminate approximately 500 jobs at its Canadian subsidiary, Stelco, intensifying concerns about foreign ownership and the future of Canada’s steel industry.

The company announced plans to suspend cold-rolled and coated steel production at its Hamilton operations, citing weak demand, American tariffs and broader challenges affecting North American steel markets.

Industry Minister Mélanie Joly has warned that Cleveland-Cliffs must honour commitments made when it acquired Stelco in a deal valued at approximately $2.5 billion in 2024, including undertakings concerning employment and continued Canadian operations.

Ottawa is examining potential measures under the Investment Canada Act, which could include financial penalties or legal proceedings aimed at compelling the company to fulfil its obligations.

Cleveland-Cliffs CEO Lourenco Goncalves has defended the restructuring, blaming trade restrictions and Canadian economic policies for deteriorating market conditions.

The company has indicated that it intends to concentrate steel production at its Nanticoke facility while offering some affected Hamilton employees opportunities to transfer.

The dispute has prompted criticism from labour unions and opposition politicians, who are demanding stronger federal intervention to protect Canadian manufacturing jobs.

The confrontation comes as Canada continues to face steep American tariffs on steel and aluminum, placing additional pressure on an industry already struggling with uncertainty over its access to the U.S. market.