When the federal government approved Cleveland-Cliffs’ takeover of Hamilton-based steelmaker Stelco in 2024, it did so with conditions attached — binding commitments, in the language of the Investment Canada Act, that the Ohio-based company would maintain union jobs and the vast majority of non-union positions. Less than a year later, Ottawa finds itself threatening legal action to enforce those very promises.
Industry Minister Mélanie Joly sent a letter to Stelco president Paul Simon on Monday, giving the company five business days to present a plan for complying with the undertakings it made at the time of the acquisition. If no such plan is forthcoming, Joly made clear that the federal government is prepared to seek a court ruling — one that could compel compliance, impose monetary penalties, or even order a divestiture of the business. The letter, first reported by the Toronto Star and subsequently obtained by CBC News, leaves little ambiguity about Ottawa’s position.
“Undertakings given under the Act are binding commitments and do not cease to apply simply because business strategy or market conditions have changed,” Joly wrote. The minister described her “extreme disappointment” with Cleveland-Cliffs’ announcement last week that it plans to lay off as many as 500 workers while idling certain steel production at its Hamilton Works facility, a move she characterized as flatly inconsistent with what the company promised when the deal was struck.
The Investment Canada Act gives the federal government significant tools to scrutinize and attach conditions to foreign takeovers of Canadian businesses, particularly those deemed to have implications for employment and national economic interest. When Ottawa greenlighted the Cleveland-Cliffs acquisition, those tools produced concrete commitments: the company agreed to keep at least the same number of unionized employees as were in place when the deal was announced, along with the vast majority of non-union staff. The Act also provides for enforcement through the courts, a remedy Ottawa is now openly signalling it may pursue.
Cleveland-Cliffs has argued that the layoffs stem from broader trade disruptions affecting its operations, a justification Joly pointedly rejected. “This is particularly relevant here,” she wrote, “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.” That is a pointed observation: Lourenco Goncalves, the company’s CEO, has been a vocal advocate for American steel tariffs, arguing they are essential to the health of the U.S. steel industry, even as his company now invokes trade disruption as a rationale for scaling back Canadian operations.
The company, for its part, has maintained that the situation is more nuanced than a straightforward breach of its commitments. A spokesperson stated that total steel tonnage produced would not be affected by the changes, though the product mix would shift toward a higher concentration of hot-rolled steel. More significantly, the company indicated that workers displaced from the Hamilton facility would be offered positions at its Lake Erie Works plant, where it is consolidating operations. Whether that offer satisfies the letter and spirit of the Investment Canada Act undertakings remains, at this point, a matter of legal interpretation — and potentially judicial determination.
For workers at the Hamilton plant, the federal government’s swift response has provided at least some measure of reassurance, even if it falls well short of certainty. Ron Wells, president of United Steelworkers Local 1005, which represents employees at Stelco’s Hamilton Works, said he was pleased Ottawa had acted quickly. “Cleveland-Cliffs knew exactly what they were agreeing to when they bought the place,” Wells said, referring to the five-year commitment on unionized employment. He added, however, that he is not counting on the company reversing course voluntarily. “We’re hoping that they will recant the layoff,” he said, “but I’m not holding my breath.”
That cautious tone reflects something real about the limits of regulatory leverage, even when the legal framework is relatively clear. Ottawa can threaten court action, and the Investment Canada Act does provide meaningful remedies — but enforcement takes time, and workers facing imminent layoffs live in the immediate term, not in the timeline of litigation. The federal government’s intervention is a meaningful signal that foreign investors cannot treat commitments made to secure regulatory approval as optional guidelines to be discarded when economic winds shift. Whether it translates into preserved jobs in Hamilton is a question the next five business days will begin to answer.
