OTTAWA
Industry Minister Mélanie Joly has sent Stelco Inc. a new letter demanding it comply with its Investment Canada Act undertakings and has given the company 15 days to respond or possibly face legal action.
In the letter sent Thursday morning to Stelco president Paul Simon, Joly detailed multiple examples of the company allegedly violating its legally binding commitments and demanded it comply.
"In the event Cliffs fails to comply with this demand, the Minister may, pursuant to section 40 of the Act, make an application to a superior court," the letter reads.
Joly said that if the government proceeds with legal action, it would ask the courts to issue monetary penalties against Cleveland-Cliffs and potentially direct the company to divest from Stelco.
I remain prepared to sit down with Cleveland-Cliffs to find a solution. But our bottom line is clear: protect Canadian jobs, defend our steel industry and ensure that commitments made to Canada are respected.
The federal government said that by proceeding with layoffs, Ohio-based Cliffs had breached legally binding job commitments from when it acquired Stelco in 2024, including a promise to maintain at least the same number of unionized employees in Canada for five years.
Prime Minister Mark Carney said Cliffs had "betrayed" its Canadian work force.
On Sept. 28, Cliffs subsidiary Stelco announced that it was laying off up to 500 workers in Hamilton and Nanticoke, Ont.
The company said the planned layoffs are in order to "ensure the survival" of the company, as U.S. tariffs on steel squeeze its sales.
But Joly dismissed that reasoning.
Let me be clear: no act of God or change in market conditions can relieve Cleveland-Cliffs of the commitments it made to Canada. Those commitments are not optional.
Joly pointed to an undertaking to ensure the average aggregate annual unionized work force at Stelco be no smaller than 1,766 and its salaried work force be no smaller than 603.
Cliffs has "failed to comply with its employment undertakings," she wrote "and/or has made decisions that will inevitably result in the breach of these undertakings."
Joly also criticized Cleveland-Cliffs CEO Lourenco Goncalves for repeatedly backing U.S. President Donald Trump’s tariffs on Canadian steelmakers.
She said that Cliffs had promised to be "a strong advocate for policies that benefit both the U.S. and Canadian steel industries," including defending Canada’s exemption to U.S. steel tariffs in 2024.
Joly pointed to multiple examples of Goncalves advocating against Canada after the U.S. imposed tariffs on Canadian steel imports last year.
In an October, 2025, interview with Politico, the Cliffs CEO said that he was "very happy" with the 50-per-cent tariffs on steel, and in fact took credit for them.
I have my fingerprints on that 50 percent. In other words, I influenced that.
Cliffs has said that it was forced to issue the layoffs in Canada in large part because of the trade war.
Goncalves has argued that the trade war is an event that was out of its control and gives it leeway to not honour its commitments.
"Throughout the history of the Investment Canada Act and its predecessor foreign investment acts, it has consistently been understood that changes in circumstances may necessitate the non-enforcement or renegotiation of undertakings," Simon wrote in an Oct. 9 letter to Joly.
But Ottawa does not buy this logic. Joly in her letter said that when Cliffs acquired Stelco the prospect of U.S. trade action against Canada existed.
"The possibility of tariffs on Canadian steel was foreseeable in October 2024, and the Undertakings specifically reflect that possibility," she wrote.
"However, Cliffs’ Chief Executive Officer subsequently advocated for the very tariffs that Cliffs is now relying on as a basis for non-compliance with the Undertakings."
The government is giving the company several options, including complying with its undertakings, providing proof that it isn’t in contravention, or in the case that it is offside, taking steps to address the situation.
e2gold.ca reported in October that Carney and Ontario Premier Doug Ford pledged $9 billion for industries hit by U.S. tariffs.
This story was written by the e2gold.ca newsroom from reporting by The Globe and Mail and CBC News. Quotes are checked word for word against that reporting.