Carney says Cleveland-Cliffs making ‘mistake’ by not respecting obligations

Prime Minister Mark Carney warned Thursday that the U.S.‑based owner of Stelco, Cleveland‑Cliffs, would be making a “mistake” if it failed to honour the obligations it signed when it acquired the Canadian steelmaker in 2024. The comment came as the company began laying off workers, prompting concerns that the legally binding commitments on employment levels could be breached before the 2029 deadline.

Background to the acquisition and the employment pledge

In 2024, Cleveland‑Cliffs secured approval to purchase Stelco after a federal review under the Investment Canada Act. The approval included a summary of legally binding commitments that the buyer must maintain, the most salient of which requires employment at Stelco to remain at or above the levels measured at the time the agreement was signed, extending through to 2029. While the full text of the agreement has not been released, the government has confirmed that the employment clause is a core condition of the deal.

The promise was intended to protect Canadian jobs in a sector already under pressure from global competition and trade policies. By tying the acquisition to a concrete employment floor, Ottawa sought to ensure that foreign ownership would not translate into a rapid reduction of the steel‑making workforce, a concern that resonates in communities across Ontario and the Atlantic provinces where Stelco plants have long been economic mainstays.

Recent layoffs and the government’s response

According to the union representing Stelco’s workforce, about 175 workers have already been let go, with an internal memo suggesting the figure could rise to roughly 500. The layoffs have triggered a potential legal challenge from the federal government, which is now reviewing whether Cleveland‑Cliffs is in breach of its commitments. Prime Minister Carney declined to comment further, noting that a legal process is already underway in the courts and that he would reserve further remarks for “some other time.”

Industry Minister Mélanie Joly, in a letter dated 29 October, addressed Stelco’s president Paul Simon and demanded a “concrete and credible plan for re‑engagement with these workers.” Joly’s correspondence references an interim compliance report submitted by Stelco on 26 October, which she described as “far from satisfactory.” She reaffirmed her belief that both Stelco and Cleveland‑Cliffs are not complying with the undertakings required under the Investment Canada Act, specifically citing a section‑39 demand issued on 22 October.

Legal implications under the Investment Canada Act

The Investment Canada Act gives the federal government authority to impose conditions on foreign investments that affect national interests, including employment. When a condition is breached, the government can pursue legal remedies, ranging from fines to the revocation of approval. In this case, the potential breach relates directly to the employment floor stipulated in the 2024 acquisition agreement.

Legal scholars note that the government’s recourse will depend on whether it can demonstrate that Cleveland‑Cliffs’ actions constitute a material breach. The fact that the company has already begun layoffs, coupled with the minister’s assessment that the compliance report is unsatisfactory, strengthens the case for a formal challenge. However, Cleveland‑Cliffs may argue that external factors—such as U.S. tariffs on Canadian steel—are beyond its control, a defence that will be tested in court.

Cleveland‑Cliffs’ defence and external pressures

Cleveland‑Cliffs has contended that it should not be held responsible for “impacts of external factors beyond their control,” specifically pointing to U.S. tariffs that have increased the cost of Canadian steel in the American market. The company’s CEO, Lourenço Gonçalves, told The Canadian Press that the tariffs, which the firm has “actively supported,” have forced a reassessment of its operational plans.

Gonçalves also suggested a possible path to reinstating laid‑off workers, stating that if Canadian customers increase purchases of domestically produced steel, the company could recall the 175 workers before the holiday season. He framed the recall as contingent on market demand, linking the fate of the workforce directly to the health of the Canadian steel market.

Impact on Canadian steelworkers and communities

The prospect of up to 500 job losses at Stelco reverberates beyond the factory floor. Steel plants are often among the largest employers in their regions, and layoffs can trigger a cascade of economic challenges, from reduced household income to lower municipal tax revenues. Communities that have historically relied on steel manufacturing for stable employment are now confronting uncertainty about their economic future.

Union representatives have warned that the layoffs could erode the bargaining power of remaining workers and set a precedent for future foreign‑owned enterprises. They argue that the employment clause was a safeguard, and its erosion could undermine confidence in Canada’s ability to protect jobs in strategic sectors.

Political dimensions and the broader policy context

The dispute arrives at a time when the federal government is under pressure to demonstrate that it can balance foreign investment with domestic job security. Prime Minister Carney’s remarks underscore a political calculus: defending the employment clause signals to Canadians that Ottawa will enforce the conditions attached to foreign take‑overs, especially in industries deemed vital to national interest.

Industry Minister Joly’s firm stance—emphasising that Cleveland‑Cliffs “must face the consequences” of supporting U.S. tariffs—reflects a broader policy tension. While Canada seeks to maintain strong trade relations with the United States, it also aims to protect domestic producers from policies that could disadvantage them. The current situation highlights the delicate act of navigating cross‑border trade disputes while upholding commitments made to Canadian workers.

Looking ahead: possible outcomes and next steps

The legal process set to unfold in the courts will determine whether Cleveland‑Cliffs must halt further layoffs, reinstate workers, or face penalties for non‑compliance. If the government succeeds, it could reinforce the credibility of the Investment Canada Act’s conditional approvals, deterring future investors from ignoring employment commitments.

Conversely, a ruling in favour of Cleveland‑Cliffs could embolden other foreign owners to challenge similar obligations, especially when external market forces, such as tariffs, are invoked as justification. In the interim, the company’s ability to secure additional Canadian steel orders will be critical, as indicated by Gonçalves’ conditional promise to recall workers before Christmas.

For the workers and the communities that depend on Stelco, the coming weeks will be decisive. The outcome will not only affect the immediate job prospects of up to 500 steelworkers but also shape the broader narrative of how Canada manages foreign investment in sectors that are integral to its economic and strategic interests.

This article was produced with AI-assisted research and editorial support. Reporting is based on the source material cited below. Sources: Global News Canada; globalnews.ca; Global1.News (29 October 2026).

By Alex Thompson, Staff Writer