Another company to shut operations in South Africa
South African paper and plastics manufacturer MPact says it will move ahead with retrenchments as it considers shutting down its paper mill operations in Springs.
The group’s board of directors approved the commencement of section 189A retrenchment processes at the operation, which would impact approximately 377 people.
Mpact is the largest paper and plastics packaging and recycling business in southern Africa, employing over 4,557 people.
The group was established in 2011 following a demerger from Mondi, but traces its history all the way back to a cabinet-making shop in Port Elizabeth in 1877.
The shop’s owner, Bavarian immigrant Jacob Kohler, would go on to establish the Kohler Corrugated Company, which launched packaging operations in South Africa in 1920.
Kohler would sell the corrugated division to Mondi, and Mondipak was established in 1998, with MPact demerging from Mondi and listing on the JSE in 2011.
The group’s Springs paper mill is the only domestic producer of cartonboard and competes directly with imports from several countries.
However, due to significant overcapacity in the global cartonboard market and the current value of the rand, the mill’s largest customers can import cartonboard at prices approximately 20% below the mill’s cost of production.
This has led to a decline in demand for the mill’s products, and in January 2026, the mill’s largest customer notified Mpact that it will no longer procure its cartonboard requirements through the mill.
Instead, the client will procure through imports going forward. MPact said these conditions are expected to persist for the foreseeable future.
“Despite extensive efforts, Mpact is unable to bridge the cost gap and unlikely to secure sufficient demand from other customers at sustainable prices,” it said.
As a result, the company is considering shutting the mill due to the sustained deterioration in the mill’s competitiveness.
“Subject to the consideration of alternatives, production at the Springs Mill is likely to discontinue once all open orders have been completed,” it said.
“Based on current information, the mill is likely to run until the end of March 2026.”
An extract of the key audited financial information relating to the Springs Mill for the year ended 31 December 2024 is set out below:
- Plant and equipment (including capital spares): R186 million
- Current assets (inventories, trade and other receivables, cash and cash equivalents): R469 million
- Current liabilities (trade and other payables): R297 million
- Revenue: R1,739 million
- Operating profit before tax: R32 million
The audited financial information for the year ended 31 December 2025 is expected to be announced on or about 9 March 2026.
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