U.S. steel CEO's 'confessions' for buying Stelco prompted government to call its lawyers: industry minister
Canada's industry minister says she called the department's lawyers after the head of Stelco's American parent company told CBC News that he only bought the Hamilton steelmaker to stop it undercutting his production facilities in the U.S.
CEO buying Stelco to stop undercutting U.S. company 'doesn't look good': trade lawyer
Peter Zimonjic · CBC News
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Canada's industry minister says she called the department's lawyers after the head of Stelco's American parent company told CBC News that he only bought the Hamilton steelmaker to stop it undercutting his production facilities in the U.S.
"The last words by the president of Stelco definitely made us contact our lawyers to see what could be the consequences of such confessions," Industry Minister Mélanie Joly said Wednesday.
The minister's comments come after Cleveland-Cliffs CEO Lourenco Goncalves told CBC's Power & Politics Tuesday evening that the Hamilton company was "undercutting our prices in the United States."
"I bought Stelco because I could not afford anymore having Stelco flooding the market here in the United States to the detriment of my own company," he told host David Cochrane.
The CEO's comments come after Cleveland-Cliffs responded to Joly's recent demands that it reverse layoffs announced last month or face potential legal action for violating Investment Canada Act undertakings.
The government says the company agreed in those undertakings to keep the number of unionized Stelco employees at 2024 levels through to 2029 when the purchase was made.
In a letter to the company last week, Joly said if the company does not honour its agreement with the federal government it would pursue a remedy in the courts. That step, the letter said, could include asking that financial penalties be imposed or an order requiring Cleveland-Cliffs to divest from Stelco.
WATCH | Stelco in 'full compliance,' says CEO:
Stelco in 'full compliance' with commitments to Ottawa, says CEO
October 27|
Duration
14:18
With the federal government locked in a showdown with Stelco over its layoffs in Hamilton, Power & Politics speaks to the American owner of the steel plant about whether this standoff could wind up in the courtroom.Goncalves's company maintains that it's in "full compliance" with the obligations it made under the Investment Canada Act when it bought the steelmaker in 2024.
In a letter to The Canadian Press, Goncalves said he hopes to bring back laid-off Stelco workers before Christmas if a plan to increase Canadian sales succeeds.
The CEO told Power & Politics that he "takes exception" with the notion that he should have to divest from Stelco, saying that, for now, "the company is not for sale," but that will change.
"I will sell the company after we operate the company for a while — and now that I know that I'm persona non grata in Canada, I will do that," he said.
He later said: "Give me another year. I'll make money, sell the company.… [The] minister of industry is not a realtor of companies, and if she is, go sell some other company. This company has an owner, it's Cleveland-Cliffs."
'On the surface it doesn't look good'
Sandy Walker, a lawyer who specializes in competition and the Investment Canada Act, says the Federal Court does have the power order Cleveland-Cliffs to divest itself of Stelco and impose financial penalties of up to $10,000 a day.
She also said Goncalves's comments on Power & Politics raise the question of whether the company signed the Investment Canada Act undertakings in good faith "if he was ultimately planning to shut the company down."
Walker said that while "on the surface it doesn't look good," it's not quite a slam dunk for the government.
Walker said Canada would still have to prove that Cleveland-Cliffs was not subject to conditions beyond its own control when it proceeded with the layoffs.
"I don't think this case is straightforward, that that confession last night is a complete gotcha," she said.
"But it does go to show the attitude of the signatory to these undertakings, assuming [Goncalves] was the one who signed them, and it may go to how hard he is trying to meet those undertakings."
Walker points out that a Canadian court has never made an order to a company under the Investment Canada Act.
In 2009, Ottawa filed a lawsuit against U.S. Steel, after the then owner of Stelco closed many of its Canadian operations when the 2008 financial crisis resulted in a decline in global steel demand.
Ottawa ultimately withdrew the suit in late 2011 when U.S. Steel settled out of court.
WATCH | Conservative MP urges government to sue:
Conservative MP urges government to sue Stelco owner
4 hours ago|
Duration
1:15
Conservative MP Ned Kuruc for Hamilton East—Stoney Creek told reporters that 'if the government has an iron clad contract' with Stelco's American owner, Ottawa should take them to court over alleged violation of the company's agreements. 'Contracts are put in place to protect our interests and protect the workers,' Kuruc said. 'If we don't enforce them, then what do we have?'Conservative MP Ned Kuruc, who represents Hamilton-East Stoney Creek, urged the government to sue.
"If the government has an iron-clad contract … file the lawsuit," Kuruc said. "We need action. Get to court, show them we mean business — because ultimately this shows weakness from our government."
ABOUT THE AUTHOR
Peter Zimonjic is a senior writer for CBC News who reports for digital, radio and television. He has worked as a reporter and columnist in London, England, for the Telegraph, Times and Daily Mail, and in Canada for the Ottawa Citizen, Torstar and Sun Media. He is the author of Into The Darkness: An Account of 7/7, published by Vintage.
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