Canada’s Joly Threatens to Force Cleveland-Cliffs Asset Sale

(Bloomberg) -- Canada’s industry minister said the government has the power to try to force Cleveland-Cliffs Inc. to sell its assets the country, escalating a dispute over job cuts at the company’s steel operations in Ontario.

Speaking to reporters in Ottawa on Wednesday, Mélanie Joly said Canada’s main investment law allows the government to take a number of actions against the steel company, including financial penalties or “forcing them to sell their Canadian assets. Everything is on the table.”

Shares of Cleveland-Cliffs were down 3.3% as of 2:13 p.m. in New York on Thursday.

Cleveland-Cliffs has said it will lay off hundreds of workers at its Stelco operation in Hamilton, Ontario, which it acquired in 2024. The company says the trade war between Canada and the US has created a situation “beyond its control,” forcing it idle parts of Stelco that make cold-rolled and coated steel. It cited the Trump administration’s decision to impose 50% tariffs on foreign steel products.

Under the Investment Canada Act, the government can seek a divestiture if a company fails to stand by the written undertakings it made about its investment. But the government would need to apply for a court order first.

Prime Minister Mark Carney has called the job reductions a “betrayal” and threatened legal action.

“I’m always open to sit down with the company and find a solution, but we’re looking at everything that is possible to keep jobs in Canada,” Joly said Wednesday.

A spokesperson for Cleveland-Cliffs didn’t respond to a request for comment.

In a letter to Joly dated Oct. 9, the Cleveland-Cliffs division denied it broke employment promises made at the time of the acquisition.

“The undertakings do not stipulate a commitment to avoid layoffs, nor do they include a requirement that employment levels be above a certain amount on each day of the five years of the undertakings,” Stelco President and General Counsel Paul Simon wrote.

(Updates with share price and additional information on investment law, starting in the third paragraph.)

More stories like this are available on bloomberg.com

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