Stelco in Hamilton, Ontario on Tuesday, October 13, 2026. Photo by Peter Power/Postmedia

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We are three weeks into the great legal, economic and political battle between Mark Carney’s Industry Minister, Mélanie Joly, and Lourenco Goncalves, CEO of Cleveland-Cliffs Inc., the U.S. steel company that owns Stelco, the Hamilton, Ont.-based Canadian steelmaker. But it is still impossible to make sense of it all.

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As companies, both seem to be going gangbusters, at least according to Cleveland-Cliffs’ announcement Monday that sales and profits for the third quarter are coming in strong, including at Stelco, which apparently is doing great despite the fact that it announced 500 layoffs in Hamilton three weeks ago. “Third quarter was Stelco’s strongest quarter since we acquired the company two years ago,“ said Goncalves. “The Canadian hot-rolled market has improved substantially, turning Stelco into a positive contributor to EBITDA in Q3.” Sales of galvanized steel from Hamilton are another story, he added.

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So what’s going on? The major issue: Does Cleveland-Cliffs have the right to lay off 500 Stelco workers making steel in Hamilton? After 21 days there is still no solid factual foundation to determine who is right and who is wrong, who is playing games and who is not. Or maybe both are.

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The legal facts are buried in a contract, signed by Ottawa and Cleveland-Cliffs in October 2024, that allowed the U.S. company to pay $3.4 billion to conclude a foreign takeover of Stelco under the Investment Canada Act. The details and wording of the contract remain secret, leaving both sides free to make contradictory and accusatory claims.

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According to Joly, backed rhetorically by Prime Minister Carney, Cleveland-Cliffs has broken the terms of the takeover agreement. “It is the government’s position,” she said last week, that by laying off 500 workers Stelco has “breached its commitments” and the government will use “the full force of the law” to punish Stelco and its U.S. parent if Goncalves doesn’t reverse the layoffs decision.

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According to Joly, when a company breaks a contract agreement, the government can, under Section 40 of the Investment Canada Act, force financial penalties on the company or force it to sell its Canadian assets. As Carney put it: “We intend to use all powers that we have and pursue them to the full extent of the law.”

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In law, Ottawa does appear to have the power to force the sale of Stelco, but only under certain court-determined conditions. The investment act states that if the company is found to have failed to live up to a contract agreement, the court has the power to direct “the non-Canadian to divest themselves of control of the Canadian business, or to divest themselves of their investment in the entity, on any terms and conditions that the court considers just and reasonable.”

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But did Cleveland-Cliffs actually breach the original agreement? It is impossible to know. The terms and exact wording of the steel takeover deal apparently cannot be reviewed by anyone (pending a leak, or course).

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According to Cleveland-Cliffs’ CEO, Joly and Carney are misrepresenting the terms of the five-year contract. In an interview with CBC last week, Goncalves stated that “There is no provision in the contract that I have to keep employment at a certain level every single day of the five years. If that was an imposition of the Canadian government, I would not have accepted.” The CEO has said Ottawa’s threats amount to “bullying and harassment,“ and told BNN-Bloomberg this week that Joly is treating his company “like a pariah.” He said Stelco is doing well and the employees under notice will be returned to continue to produce galvanized steel at the Hamilton plant.