Hamilton-based steelmaker Stelco says it will proceed with hundreds of layoffs, despite threats of legal action from the federal government.

In a letter obtained by CBC News, Stelco Inc., which is owned by Ohio-based Cleveland Cliffs, says it rejects allegations from Ottawa that it is violating binding employment commitments under the Investment Canada Act (ICA).

“Your representation that Stelco’s planned layoffs cause it to breach its undertakings is false,” says a letter written to Industry Minister Mélanie Joly by Paul Simon, president and general counsel at Stelco Inc.

Citing the ICA’s guidelines, Simon went on to write “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.”

The letter comes after Joly issued an ultimatum last week to the company: share a plan to save the up to 500 jobs that could be impacted at the Hamilton-based steelmaker or face potential legal action.

WATCH | Up to 500 Stelco employees impacted by layoffs:

Stelco layoffs start despite Ottawa’s legal threats

Stelco started laying off steelworkers at its Hamilton plant despite government demands that it reveal a jobs-saving plan within five days or face potential legal action.

Cleveland-Cliffs acquired Stelco in a $3.4-billion cash-and-stock deal that, according to a news release at the time, kept “national interests at the forefront” and recognized the “importance of the workforce.”

According to Joly’s letter, this includes “undertakings to continue to employ at least the same number of unionized employees and the vast majority of non-unionized employees as were employed when the transaction was announced.”

In its letter to Joly, the company emphasized “Stelco’s situation is a result of factors beyond its control” — citing the impact of U.S. President Donald Trump’s 50 per cent tariffs.

The federal government has said that Stelco refused offers of financial support before choosing to announce it was idling its Hamilton plant.

Stelco’s letter alleges “the government’s offers of financial assistance were not responsive to the issues at hand and did not address the root cause for Stelco’s decision to indefinitely idle its Hamilton Works finishing lines.”

Stelco, did present a plan to comply with ICA job commitments in its letter, as requested by Joly.

The company reaffirmed that it will proceed with its Hamilton layoffs, again citing “exenstive external factors” that make it difficult to produce and profit off of those steel products. It said laid off workers could be given the opportunity to fill open positions at its Lake Erie plant. Stelco said it would continue to engage with the federal government.

In terms of what the company wants to see from Ottawa, it wrote: “The most important step the government could take would be to impose further restrictions on imports of cold-rolled and coated steel products into Canada, limit import substitution, and eliminate remissions for steel products that Canadian producers, including Stelco, can supply.”

CBC News has reached out to Joly’s office for comment and will update with any response.