Ottawa gives Stelco owner 15 days to address alleged violations or face legal action

Ottawa has given the U.S. owner of Stelco Inc. a 15-day deadline to address alleged violations of commitments made when it purchased the Ontario steelmaker or face potential legal action that could include a forced sale of its Canadian operations.

In an 11-page letter Thursday, Industry Minister Mélanie Joly accused Cleveland-Cliffs of failing to honour six binding commitments, including employment guarantees.

Joly said the company must address its alleged violations, prove it has not broken its commitments or explain why it has failed to meet them. 

If the company fails to comply, Ottawa could ask a court to order it to meet its commitments, pay penalties of up to $10,000 a day or sell Stelco, she said.

Speaking to reporters Thursday, Joly said the federal government is already aware of possible buyers for Stelco's operations if Cleveland-Cliffs was forced to sell.

“Forced divestiture is definitely on the table and we already know that there are some potential buyers that are interested in buying the Canadian assets of Stelco,” she said.

Cleveland-Cliffs announced plans on Sept. 28 to lay off up to 500 workers at Stelco's Hamilton Works and Lake Erie Works in Ontario, citing U.S. tariffs and challenging market conditions.

Thursday's letter serves as a formal demand under Section 39 of the Investment Canada Act. It sets out the government's allegations and gives Cleveland-Cliffs 15 days to address them, a required legal step before Ottawa could ask a court to enforce the company's commitments.

A lawyer familiar with the act said the letter provides a more detailed account of the alleged violations and helps ensure Ottawa has followed the required steps before pursuing court action.

“You don't want to go in front of a judge and then the judge decides, 'Well, you didn't actually follow the rules yourself,'” said Nassira El Hadri, founder of Hadri Law in Toronto. 

She said companies with existing commitments to Ottawa, as well as prospective foreign investors interested in Canadian acquisitions, will be watching closely.

"Foreign investors who have ... undertakings are now looking at this saying, 'OK, how is this going to play out?'"

In the letter, Joly accused Cleveland-Cliffs of championing U.S. tariffs on Canadian steel despite its commitment to support Canada's steel industry, then using those same tariffs to justify layoffs.

"You can't have your cake and eat it too," Joly told reporters in Toronto. 

The letter quotes Cleveland-Cliffs chief executive Lourenco Goncalves' written testimony to the U.S. Congressional Steel Caucus in January, in which he welcomed the possibility that the Canada-U.S.-Mexico free trade agreement would not survive its 2026 review and argued that manufacturing should be concentrated in the United States.

"Since we acquired Stelco in 2024 — before President Trump was back in office — we blocked Stelco from selling steel into the U.S. market," Goncalves said. 

"I am glad that there is a good chance that the USMCA will not survive the 2026 review," he said at the time. "We need manufacturing in the United States. Not in Canada; not in Mexico."

The company argued that Canada's galvanized steel market is too small to support two domestic producers, Stelco and ArcelorMittal Dofasco, alongside steel imports. 

It has called on Ottawa to tighten import restrictions to protect Canadian production.

The letter discloses the exact employment commitments Cleveland-Cliffs agreed to, including maintaining an annual average of at least 1,766 full-time-equivalent unionized workers and 603 full-time-equivalent salaried workers.

In a statement posted on X, Joly said she remains 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," she said. 

Joly added: "Let me be clear: no act of god or change in market conditions can relieve Cleveland-Cliffs of the commitments it made to Canada."

The letter also reveals that concerns about Cleveland-Cliffs' compliance with its commitments existed before the recent layoff announcement.

The letter said Cleveland-Cliffs acknowledged in November 2025 that it failed to meet two other undertakings related to maintaining co-op and summer student programs and supporting the community through charitable contributions.

Ron Wells, president of United Steelworkers Local 1005, which represents workers at Stelco’s Hamilton plant, called Joly's letter compelling. 

"She did a good job of explaining our position," he said. "We support the letter ... we just wish the process could be faster because unfortunately our members are on the street." 

Stelco's Lake Erie Works produces hot-rolled steel used in construction and manufacturing, while Hamilton Works processes steel into cold-rolled and galvanized products used in automobiles and appliances.

This report by The Canadian Press was first published Oct. 22, 2026.

By Brett Bundale | Copyright 2026, The Canadian Press. All rights reserved.