Ottawa Has Given Stelco's Owner 15 Days and Ontario's Steelmakers $5 Billion. The Company Says It Wants Neither

Prime Minister Mark Carney and Ontario Premier Doug Ford announced a joint action plan worth $8.7 billion on Wednesday, built around a Joint Steel Action Fund of $5.2 billion over five years, $3.55 billion from Ottawa and $1.67 billion from Ontario, to help mills in Hamilton and Sault Ste. Marie diversify production, supply defence and infrastructure projects and find overseas buyers. The plan adds $2.5 billion over two years for automotive capital projects and matches Ontario's $1 billion for roads into the Ring of Fire. Carney said the steel money would protect more than 100,000 jobs and the auto money 120,000, and that the plan goes "hand in hand" with faster federal project approvals that will create demand for Canadian steel and critical minerals.

On Thursday Industry Minister Mélanie Joly sent Cleveland-Cliffs a demand letter, obtained by Radio-Canada, giving the company 15 days to reverse the layoffs at Stelco's Hamilton and Nanticoke plants. The letter says the company is in breach of the employment undertakings it gave under the Investment Canada Act when it bought Stelco for $3.4 billion in 2024, and that if it does not comply "the Minister may, pursuant to section 40 of the Act, make an application to a superior court" seeking penalties and, potentially, an order to divest. The deadline falls on 6 November, three days after the US midterm elections.

Steelmakers have the same window to apply to the new fund, which Carney said would also redirect government procurement to domestic suppliers.

From the analysis

The company has already answered, in effect, through its third-quarter results. Cleveland-Cliffs reported net earnings of US$612 million, its strongest quarter in three years, and chief executive Lourenco Goncalves said the period was "Stelco's strongest quarter since we acquired the company two years ago", with the Canadian hot-rolled market improving substantially and Stelco now a positive contributor to earnings. The same statement said the galvanising lines would be idled indefinitely because Canada's galvanised steel market is "clearly oversupplied" with imports, that total tonnage at Stelco would be maintained, that about 2,000 Canadian jobs are preserved, and that laid-off workers would be recalled as soon as conditions improve. On the earnings call he said what Stelco needs is a market to sell galvanised steel, not financial support, and that Ottawa could bring the workers back immediately with tighter import restrictions.

Set the three documents side by side and the argument is clearer than the politics. Ottawa says a job-count undertaking is binding regardless of market conditions. The company says it is maintaining output and profit while cutting a product line that imports have made unprofitable, and that the undertaking cannot have meant running a loss-making line for ever. The $5.2 billion steel fund is designed for exactly the pivot Cliffs says it is making, away from products that no longer have a Canadian market, and the company is the one steelmaker in the province saying it does not want the money. Employment lawyers quoted by HR publications this week say nobody can be sure who is legally right, because section 40 has rarely if ever been tested against undertakings in a trade war.

We think the demand letter is the weaker of Ottawa's two moves, and the import question is the stronger one. A forced divestiture of a profitable mill, from an owner that has just reported its best quarter and is keeping 2,000 jobs, would tell every foreign acquirer that Canadian undertakings are read literally through a downturn and enforced by sale. Galvanised imports are a trade remedy question that the Canada Border Services Agency and the finance ministry can answer with tariff-rate quotas and anti-dumping findings inside the 15 days, and Goncalves has said publicly that this would bring the workers back. If the government believes him, it has a cheaper and faster remedy than court. If it does not, it should say why a company praising Donald Trump's tariffs would turn down a Canadian market protected from the same imports.

Two clocks are now running. Cliffs has until 6 November to respond to the letter. Steelmakers have the same window to apply to the new fund, which Carney said would also redirect government procurement to domestic suppliers. The Bank of Canada decides rates on 28 October with Ontario's manufacturing base as the main argument against a hike, and the US midterms on 3 November will determine whether the tariffs that started this are negotiated or entrenched. The question the deadline will answer is whether the year's biggest industrial package for Ontario was designed to save Stelco's galvanising lines or to replace them.

The Semaform

The news

Ottawa and Ontario unveiled an $8.7 billion industrial package on 21 October and on 22 October Industry Minister Mélanie Joly sent Cleveland-Cliffs a 15-day demand to reverse Stelco layoffs or face court, as the company reported its strongest quarter in three years and said it wants a protected market for galvanised steel rather than money.

Sox’s view

Forcing the sale of a profitable mill over a product line killed by imports would damage Canada's standing with every foreign investor; the import remedy the company itself is asking for is cheaper, faster and within Ottawa's existing powers.

Room for disagreement

Ottawa and the United Steelworkers say the 2024 undertakings are binding whatever the market and that a company posting record profits can afford to honour them; Cleveland-Cliffs says the layoffs are temporary, tonnage and 2,000 jobs are preserved, and the government should fix the import glut it has ignored.

Sources

A human editor is accountable for this analysis. Read our editorial standards, how we use AI, what the content labels mean, and how to ask for a correction.

Ottawa Has Given Stelco's Owner 15 Days and Ontario's Steelmakers $5 Billion. The Company Says It Wants Neither

The Semaform

Sources

More from the Global

Alberta Said No to Leaving by Three to One. The Other Nine Answers Are the Ones Ottawa Has to Live With

76 Per Cent: Alberta's Early Count Rejects a Vote on Leaving Canada

Canada's Core Inflation Is 1.8 Per Cent. Markets Are Pricing a Rate Rise Anyway