Cleveland-Cliffs' CEO calls the threats "bullying and harassment" and says the layoffs are temporary. Industry Minister Joly says penalties and a forced divestiture are both on the table.

The standoff over Stelco's Hamilton layoffs hardened this week. Cleveland-Cliffs CEO Lourenco Goncalves told BNN Bloomberg on Thursday that his company is prepared to defend itself in court and accused Ottawa of "bullying and harassment." A day later, Industry Minister Mélanie Joly told the Canadian Club of Toronto that the government will use "every tool in the toolbox" to keep the jobs in Canada or force a sale of the company's Canadian assets.

How we got here

Stelco began winding down cold-rolled and coated operations at its Hamilton plant in early October, affecting up to 500 jobs across Hamilton and Nanticoke, and blamed the 50% U.S. tariffs on Canadian steel. Ottawa says the layoffs breach undertakings Cleveland-Cliffs gave under the Investment Canada Act when it bought Stelco in 2024, including a pledge to protect Canadian jobs, and Joly gave the company five business days to produce a compliance plan.

In an October 9 letter, Stelco president Paul Simon said Canadian exports of cold-rolled and coated steel to the United States have dropped 58% from pre-trade-war levels. He said the company is preparing to restart Hamilton's finishing operations but offered no timeline. Ottawa has said it is reviewing the letter, in which Stelco argues the layoffs do not violate its commitments.

The company's case

Goncalves describes the layoffs as a business decision to concentrate production. He says they are temporary and that he intends to rehire the workers, that Stelco is profitable this year, and that Cleveland-Cliffs did not violate the deal it struck with then-industry minister François-Philippe Champagne. He also warned that threatening a forced sale would hurt Canada's ability to attract foreign investment, and compared talk of government intervention to Venezuela's takeover of its steel industry, adding that he doesn't think Canada is that kind of country.

Ottawa's case

Joly says the undertakings are legally binding and has said financial penalties and a forced divestiture are both possible. Reports this week said Ottawa could even take a stake in the company if the layoffs aren't rescinded, and that a legal challenge could come within days. In an earlier letter she pointed out that Goncalves publicly backed the U.S. Section 232 steel tariffs now being cited as the reason for the cuts. A Hamilton union leader told CBC that, in a perfect world, the federal government would nationalize Stelco.

Two stories that can both be true

The company's messaging can sound contradictory. An early memo described an unsustainable market for these products and a threat to the company's survival, while Goncalves now says Stelco is profitable. But both can hold at once: a steep drop in cold-rolled exports to the U.S. can hurt one product line while the wider business stays in the black, which is how Goncalves frames the decision to concentrate production. The legal question is narrower. It is whether the layoffs breach the specific undertakings Ottawa attached to the 2024 approval, whatever the company's finances. That is what a court would have to decide.

What to watch

The immediate signals are whether Ottawa files in court, and whether Stelco rescinds the layoff notices or sets a restart date. For the roughly 350 Hamilton workers affected, the earlier offer of jobs at Lake Erie Works covers only 46 openings, according to their union. More broadly, the case is a test of how enforceable job commitments attached to foreign takeovers really are, a question every future buyer of a Canadian industrial asset will be watching.