{"id":860245,"date":"2026-05-14T17:00:00","date_gmt":"2026-05-14T15:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=860245"},"modified":"2026-05-14T16:25:35","modified_gmt":"2026-05-14T14:25:35","slug":"the-unique-town-in-south-africa-at-risk-of-becoming-a-ghost-town","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/860245\/the-unique-town-in-south-africa-at-risk-of-becoming-a-ghost-town\/","title":{"rendered":"The unique town in South Africa at risk of becoming a ghost town"},"content":{"rendered":"\n

The Sappi Ngodwana Mill in Mpumalanga\u2014and the small town that depends on it\u2014could face an uncertain future as the company faces a challenging operating environment, partly due to cheap imports.<\/p>\n\n\n\n

Shares in Sappi fell 14% after the company released its results for the second quarter ending March 2026. Year-to-date, the share price has plunged 38%.<\/p>\n\n\n\n

The company reported<\/a> deeper losses and warned that conditions are likely to remain difficult in the months ahead.<\/p>\n\n\n\n

The group posted a loss of $413 million for the quarter, compared with a loss of $20 million in the same period a year earlier.<\/p>\n\n\n\n

In response, Sappi further reduced its capital expenditure plans by another $10 million as it adopted what it described as a cautious approach amid worsening market conditions.<\/p>\n\n\n\n

\u201cThe operating environment remains challenging, with a weak global macroeconomic backdrop and persistent geopolitical and trade tensions continuing to undermine market confidence and consumer demand,\u201d the company said.<\/p>\n\n\n\n

Sappi added that conflict in the Middle East had increased uncertainty in global markets and pushed up oil prices, which are expected to raise fuel, delivery and logistics costs.<\/p>\n\n\n\n

The company also warned that disruptions to supply chains could lead to higher raw material costs, particularly for chemicals.<\/p>\n\n\n\n

Sappi said its packaging and speciality papers division is expected to continue facing pressure from lower selling prices, while profitability in South Africa has already been heavily affected by weaker pricing and exchange rate pressures.<\/p>\n\n\n\n

It added that the profitability of its pulp segment was also materially affected by lower US dollar-denominated dissolving wood pulp prices and unfavourable rand exchange rate movements.<\/p>\n\n\n\n

Containerboard sales were also impacted by weak global conditions and growing competition from imported products.<\/p>\n\n\n\n

\u201cNet selling prices were 3% lower than last year, reflecting weak global containerboard market conditions and increased competition from low-priced imports into South Africa,\u201d the company said.<\/p>\n\n\n\n

Cheap imports risk the town of Ngodwana in Mpumalanga<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

The concern over imports comes as Sappi has formally applied<\/a> to the International Trade Administration Commission of South Africa for a 5% tariff on imported newsprint.<\/p>\n\n\n\n

According to the company, an oversupply of cheap foreign products is placing severe pressure on local manufacturing.<\/p>\n\n\n\n

\u201cWith global overcapacity and increasing low-priced imports, Sappi\u2019s newsprint facility has faced persistent financial losses,\u201d the company said in its submission to the commission.<\/p>\n\n\n\n

\u201cWithout the requested tariff intervention, the continued viability of South African newsprint manufacturing is at significant risk.\u201d<\/p>\n\n\n\n

The warning has raised concerns about the long-term future of the Sappi Ngodwana Mill and the town of Ngodwana, which has relied on the facility for decades.<\/p>\n\n\n\n

The mill, which began operations in 1966, is the economic centre of the small town in Mpumalanga\u2019s Ehlanzeni District.<\/p>\n\n\n\n

A major reduction in operations or possible closure would affect not only industrial production but also thousands of residents who depend directly or indirectly on the plant.<\/p>\n\n\n\n

South Africa\u2019s print industry has already been under pressure due to the rapid shift to digital media, with newspapers and magazines either closing or moving online. <\/p>\n\n\n\n

This has reduced demand for locally produced newsprint while increasing pressure on domestic manufacturers already struggling with rising costs.<\/p>\n\n\n\n

According to Sappi\u2019s website, the Ngodwana operation contributes approximately R5.8 billion to the local economy and directly employs around 1,100 people.<\/p>\n\n\n\n

Thousands more jobs are linked to contractors, suppliers and secondary businesses supported by the mill.<\/p>\n\n\n\n

The facility produces paper pulp, newsprint, containerboard and dissolving wood pulp used in textile manufacturing and other applications.<\/p>\n\n\n\n

Through its Project GoCell initiative, launched in 2013, the mill also expanded into the growing global dissolving pulp market.<\/p>\n\n\n\n

The operation also plays an important role in energy generation. Using biomass, the facility produces steam and electricity and exports surplus energy to the national grid.<\/p>\n\n\n\n

Sappi said this power supports around 20,000 households and sustains about 180 related jobs.<\/p>\n\n\n\n

The company has also invested in community programmes in the area, including construction and skills-training initiatives that have equipped more than 800 residents with construction skills.<\/p>\n\n\n\n

However, more financial strain may still lie ahead. Sappi said an annual maintenance shutdown at the Ngodwana Mill scheduled for the third quarter is expected to reduce earnings by about $23 million, while rising fuel costs are also likely to negatively affect forestry valuations.<\/p>\n","protected":false},"excerpt":{"rendered":"

A small town that depends on a paper mill is at risk as the company faces a challenging operating environment, partly due to cheap imports.<\/p>\n","protected":false},"author":92,"featured_media":860256,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[25397,13634,853],"class_list":["post-860245","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-ngodwana","tag-sappi","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/860245","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=860245"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/860245\/revisions"}],"predecessor-version":[{"id":860258,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/860245\/revisions\/860258"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/860256"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=860245"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=860245"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=860245"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}