Canadian Industry Minister Mélanie Joly has given Cleveland-Cliffs Inc. 15 days to address alleged breaches of job commitments from its 2024 Stelco takeover, raising the prospect of court enforcement.
The Canadian Press reported that Joly’s 11-page letter, dated Oct. 22, alleges violations of six binding promises. It seeks a response to the allegations, evidence of compliance or an explanation for any shortfall.
According to The Canadian Press, the letter specifies annual averages of at least 1,766 full-time-equivalent unionized workers and 603 full-time-equivalent salaried workers. Canada’s 2024 approval of the acquisition was tied to five-year undertakings, including a pledge to retain at least the unionized headcount in place when the deal was announced and the vast majority of nonunionized employees.
Cleveland-Cliffs plans to idle finishing operations at Hamilton Works indefinitely. The Canadian Press reported that the planned cuts could affect up to 500 workers at Hamilton Works and Lake Erie Works. In a filing with the U.S. Securities and Exchange Commission, the company cited limited Canadian demand for higher-value sheet products while imports continued to enter the market.
Cleveland-Cliffs said in its third-quarter results that a shift toward hot-rolled products would maintain Stelco’s total production and preserve about 2,000 Canadian jobs. Cleveland-Cliffs CEO Lourenco Goncalves said affected employees would return when conditions improve.
Stelco President and General Counsel Paul Simon contested Ottawa’s interpretation in an Oct. 9 letter, Global News reported. He argued that the undertakings permit layoffs and do not require a fixed headcount on every day of the five-year term.
Under the Investment Canada Act, a minister can demand that a foreign investor cease a contravention, remedy a default, show cause or justify non-compliance. If Cleveland-Cliffs fails to comply, Ottawa can apply to a superior court. Only if the court finds the demand justified and the company noncompliant could it order compliance, require divestiture or impose a penalty of up to C$10,000 per day.
Canada pursued a similar case after U.S. Steel bought Stelco in 2007. Ottawa went to court in 2009 over employment and production commitments, then reached a settlement in 2011 that added operating pledges through 2015 and at least C$50 million in investment.
Cleveland-Cliffs’ response to the 15-day demand is the next step.
