Stelco owner blames Ottawa for layoffs after best quarter

Cleveland-Cliffs chief executive Lourenco Goncalves said Monday that Stelco had its strongest quarter since the U.S. company bought it two years ago, even as it presses ahead with up to 500 temporary layoffs at the Ontario steelmaker and blames Ottawa for them.

Goncalves made the comments on Cleveland-Cliffs’ third-quarter earnings call for the period ended Sept. 30, according to CP24 and Manufacturing Dive. He said Stelco was a “positive contributor” to the company’s results. CP24 did not report revenue or earnings figures for the Canadian unit.

The call adds a new twist to a dispute that has escalated for three weeks. Stelco announced on Sept. 28 that it would idle finishing operations in Hamilton and lay off up to 500 workers in Hamilton and Nanticoke, Ont., saying it could no longer make galvanized steel profitably.

Goncalves said the problem is Canada’s galvanized steel market, which he called oversupplied. He said the domestic market cannot support two producers, Stelco and ArcelorMittal Dofasco, given what he described as an “avalanche of imports,” Manufacturing Dive reported.

He said Canada’s tariff-rate quota system has not curbed those imports enough. Producers advised the government on fixes, he said, but “we were not successful.”

The CEO said the laid-off workers could return quickly. If Ottawa blocked or sharply cut galvanized imports, Stelco could recall all of them and restart galvanizing in Hamilton, he said. He also said total production tonnage would be maintained and about 2,000 Canadian jobs preserved, according to CP24.

Goncalves credited Canada’s enhanced tariff-rate quotas on steel, introduced in December 2025 and updated in June, with helping the hot-rolled steel business at Lake Erie Works in Nanticoke. That plant makes hot-rolled steel used in construction and pipelines. Hamilton Works makes cold-rolled and coated products such as galvanized steel, which feed the automotive, agriculture and infrastructure sectors.

He said Stelco will focus on hot-rolled products for now because that market can support it.

On Ottawa’s response, Goncalves said the government offered financial support but that “that’s not what Stelco needs,” CP24 reported. He has rejected bridge financing before. His argument is that the government already has the power to fix the problem through trade measures.

The federal government has a very different reading. Industry Minister Mélanie Joly has said the layoffs breach commitments Cleveland-Cliffs made under the Investment Canada Act when it bought Stelco in 2024. Those conditions require the company to keep at least the same number of unionized employees in Canada for five years.

Joly gave the company five days to explain on Oct. 5. Stelco president Paul Simon replied that the claim of a breach was “false,” as we reported Oct. 11. Joly then warned the owner could be forced to sell its Canadian assets, Manufacturing Dive reported, saying the government would “use the full force of the law.”

The earnings call shows why the two sides are talking past each other. Ottawa says the job guarantees were a condition of the sale and are not contingent on market conditions. Cleveland-Cliffs says conditions have changed and that trade policy is to blame.

One tension is hard to miss. The company says the Canadian business is improving, yet the workers in Hamilton remain out of work. The United Steelworkers Local 1005 has estimated that 350 members in Hamilton will lose work, and Stelco has said only about 40 of them got job offers at Nanticoke, CP24 reported Oct. 1.

CP24’s report did not include any union reaction or any new comment from Joly.

What happens next depends on whether Ottawa tightens galvanized steel import limits, as Goncalves wants, or moves to enforce the 2024 undertakings. The government has not said which route it prefers.

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Sourcing: via CP24, with additional reporting from Manufacturing Dive.