Canada warns Cleveland-Cliffs of forced asset sale over 500 job cuts
Key Facts
Canadian Industry Minister Mélanie Joly warned in an October 16 letter that Cleveland-Cliffs could face the sale of its Canadian assets if it fails to preserve the jobs it pledged to protect when acquiring Stelco. The warning comes amid a dispute over plans to lay off 500 workers, according to a letter from the minister reported by The Canadian Press. Joly said Ottawa had retained lawyers as it reviewed possible action against Stelco's U.S. owner. The dispute concerns enforcement of binding commitments attached to government approval of the acquisition, chiefly those relating to employment. Prime Minister Mark Carney had already stepped up his criticism of the company, saying, according to the Associated Press, that "our hearts go out to the workers and families who have been betrayed by the company."
The shutdown affects Stelco's cold-rolling and coating operations in Hamilton, Ontario, according to Cleveland-Cliffs' earnings statement. The group announced it would idle its galvanizing lines indefinitely as part of a restructuring focused on hot-rolled products. It said in the statement that "Stelco's total production volume will be maintained," with production continuing under that approach. It added that its plan preserves about 2,000 Canadian jobs, setting out its response on the future of employment at its operations. In a separate response reported by iPolitics on October 14, Stelco maintained its position on the commitments accompanying the deal, saying it "remains compliant with its undertakings."
Stelco attributed the planned layoffs to "the ongoing trade crisis, weak demand and continued import pressure," according to remarks from the company reported by The Canadian Press. It also said its exports of cold-rolled and coated steel had fallen 58%, blaming U.S. tariffs of 50% for the decline. That trade pressure is linked to the Canadian steel sector's reliance on U.S. buyers, according to Canadian Finance Department data on export destinations. Canadian producers exported slightly more than 50% of their annual output in 2024, according to the department. More than 90% of those exports went to the United States, whose tariffs Stelco cites to explain the decline in exports of the affected products.
Cleveland-Cliffs completed its acquisition of Stelco on November 1, 2024, according to its filing with the U.S. Securities and Exchange Commission. When announcing the deal, the group estimated Stelco's implied enterprise value at about US$2.5 billion, equivalent to C$3.4 billion. Chief Executive Lourenco Goncalves said at completion that the acquisition would allow the group to diversify its customer base and lower its cost structure. The Canadian government approved the transaction in exchange for a package of binding commitments lasting 5 years, according to a statement from Innovation, Science and Economic Development Canada. The approval conditions also included keeping Stelco's headquarters in Hamilton, alongside commitments on employee numbers.
The acquisition terms require the company to maintain the same number of unionized employees and the vast majority of non-unionized employees, according to the Canadian department. In a demand reported by The Canadian Press on October 6, the government gave Cleveland-Cliffs 5 days to submit a plan to comply with its acquisition commitments. The government linked failure to provide that plan to possible legal action as part of its efforts to protect jobs covered by the commitments. The department says a court can order compliance with undertakings or divestment of assets when enforcing the Investment Canada Act. A forced sale remains a potential court-ordered option in this dispute under those powers, while the government continues to review avenues for action against the company.
At the group level, Cleveland-Cliffs reported adjusted earnings before interest, taxes, depreciation and amortization of US$612 million in the third quarter of 2026. That exceeded management's previous guidance of $575 million for the same period, according to the company's statement. On the fate of affected workers, the group said it expected to absorb a large number of Hamilton employees at its Lake Erie Works facility in Nanticoke, according to the Associated Press. Joly, meanwhile, tied the government's next steps to reaching a resolution of the dispute or pursuing legal action. In remarks on October 16, the minister described the timeline as "a matter of days."