{"id":849743,"date":"2026-02-04T08:12:50","date_gmt":"2026-02-04T06:12:50","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=849743"},"modified":"2026-02-04T08:17:34","modified_gmt":"2026-02-04T06:17:34","slug":"another-company-to-shut-operations-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/849743\/another-company-to-shut-operations-in-south-africa\/","title":{"rendered":"Another company to shut operations in South Africa"},"content":{"rendered":"\n

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.<\/p>\n\n\n\n

The group’s board of directors approved the commencement of section 189A retrenchment processes at the operation, which would impact approximately 377 people.<\/p>\n\n\n\n

Mpact is the largest paper and plastics packaging and recycling business in southern Africa, employing over 4,557 people. <\/p>\n\n\n\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

The group’s Springs paper mill is the only domestic producer of cartonboard and competes directly with imports from several countries.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Instead, the client will procure through imports going forward. MPact said these conditions are expected to persist for the foreseeable future.<\/p>\n\n\n\n

“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.<\/p>\n\n\n\n

As a result, the company is considering shutting the mill due to the sustained deterioration in the mill’s competitiveness. <\/p>\n\n\n\n

“Subject to the consideration of alternatives, production at the Springs Mill is likely to discontinue once all open orders have been completed,” it said.<\/p>\n\n\n\n

“Based on current information, the mill is likely to run until the end of March 2026.”<\/p>\n\n\n\n

An extract of the key audited financial information relating to the Springs Mill for the year ended 31 December 2024 is set out below:<\/p>\n\n\n\n