149-year-old company shuts down the only machine of its kind in South Africa

Mpact has shut down the only machine in South Africa that made coated cartonboard after completing its remaining orders at the end of May 2026. 

This machine produced cartonboard takeaway packaging for some of South Africa’s most iconic brands, such as KFC, Blitz firelighters, and Freshpak rooibos. 

However, the company explained that a weak local economy and global oversupply of cartonboard have ensured the operation is no longer economically viable. 

In response to questions from Daily Investor, Mpact said that all orders have been completed and the machine was shut down in May 2026. 

The Springs Mill, where the machine is located, will continue to operate a separate coreboard paper machine as Mpact believes it can still be run profitably. 

This does rely on the government stepping in to impose tariffs on imports to protect the local industry. Mpact said it has applied for import protection measures. 

With regard to the coated cartonboard machine, it is too late to be saved, with imports effectively undercutting local producers. 

“Unfortunately, Mpact has reached the conclusion that the BM6 cartonboard operation is no longer viable due to its inability to compete sustainably against imports,” Mpact told Daily Investor. 

The company previously explained that the Springs Mill is the only domestic producer of coated cartonboard and competes directly with imports from several countries. 

Mpact estimates that its customers are able to import cartonboard at prices 20% below its cost of production due to global oversupply. 

As a result, the mill’s customers have turned to imports to satisfy their needs, leaving Mpact with a dwindling client base. 

In January 2026, the largest customer of the mill’s coated cartonboard notified the company that it would no longer purchase products from the mill and would use imports instead. 

“BM6 stopped production in May 2026. The closure has been substantially implemented, but not fully finalised, as we are still selling the remaining stock,” Mpact said. The company is also collecting outstanding debts. 

The BM3 coreboard machine continues to operate at Springs Mill, with Mpact saying it serves a different market to the cartonboard machine and can be run profitably. 

“Our assessment is that with the import protection, there remains sufficient demand for coreboard to support its continued operation,” Mpact said. 

The company has cut jobs, with its section 189A process at Springs Mill impacting hundreds of staff members. The entire mill employed 377 people before BM6 was shut down. 

The role of municipal mismanagement

While foreign imports have ultimately dealt the final blow to the BM6 machine at the Springs Mill, municipal mismanagement also played a large role in making local production uncompetitive. 

Mpact noted that the competitiveness of the Springs Mill has been significantly impacted by high water and electricity tariffs imposed by the Ekurhuleni Municipality. 

This greatly increased the cost of operations at the mill, as it consumes a significant amount of power and water to produce cartonboard and coreboard. 

These elevated tariffs were coupled with an increase in supply disruptions of electricity and water to the mill, impacting operations. 

Electricity and water disruptions have been major drags on the productivity of the Springs Mill for the past few years. 

It is unique among Mpact’s mills in that it is not effectively self-reliant, with the company’s other production facilities being able to reduce their reliance on government services. 

Founded in Port Elizabeth in 1877, Mpact has invested heavily in making its production facilities less reliant on municipalities for water and electricity supply. 

In its responses to Daily Investor, the company made it clear that the Springs Mill must be seen as separate to tis other operations. 

The Felixton and Mkhondo Mills, which produce containerboard to both domestic and export customers, are what the company calls “structurally more competitive” than the Springs Mill. 

These mills are located close to natural bodies of water, giving them access to the vital resource without having to use municipal supply. 

They also have a significant alternative energy supply, with Mpact investing over R2 billion to make them more self-sufficient and, thus, more competitive. 

Mpact’s other operations also have much broader customer bases, including export markets, which makes them more resilient to local economic shocks. 

The company explained that its Paper Converting business sources some of its containerboard from importers, enabling it to benefit from lower prices when available. 

“The Paper Converting business, Felixton and Mkhondo Mills, and the Plastics division are not affected by developments at Springs Mill and remain focused on delivering reliable products and services,” the company said. 

“Mpact Group remains financially strong, employing over 4,500 people across 38 sites in Southern Africa, and continues to provide dependable service to its customers.”