Mpact Ltd Begins Consultation Process as Springs Paper Mill Faces Possible Closure in 2026

South Africa’s packaging and recycling company, Mpact Lt,d has confirmed that more than 400 employees have been affected as the company initiates steps toward the potential closure of its Springs Paper Mill, citing rising manufacturing costs and increased competition from imported cartonboard.

The development was announced on Tuesday after Mpact’s board and management approved the start of a formal consultation process in terms of Section 189A of the Labour Relations Act, which governs large-scale retrenchments. The consultation process relates to the possible discontinuation of operations at the Springs mill, which is expected to conclude by March 2026 if no viable alternatives are identified.

The company stated that the Springs Paper Mill, operated by its subsidiary Mpact Operations, is under severe pressure due to the growing influx of imported cartonboard products. According to the company, these imports have increasingly undercut locally produced cartonboard, making it difficult for the mill to remain competitive.

The company noted that customer behaviour observed in January 2026 trading results suggests a long-term shift toward imported products, rather than a temporary market disruption. Mpact has indicated that it is unable to close the price gap or secure sufficient demand at prices that would allow the mill to operate sustainably.

Despite the challenges, the Springs operation has continued to generate revenue. For the financial year ending December 2024, the mill recorded revenue of R1.74 billion and an operating profit before tax of R32 million. The facility’s plant and equipment are valued at approximately R186 million, alongside other significant assets.

However, Mpact has stressed that these figures do not reflect the rapidly deteriorating market conditions or the loss of key customers, which have intensified pressure on the operation’s long-term viability.

The Springs Paper Mill employs 377 people and is currently South Africa’s only producer of cartonboard, placing its potential closure at the centre of broader concerns about the future of local manufacturing capacity. Mpact itself is the country’s largest paper and plastics packaging and recycling company, operating across 38 sites, including 21 manufacturing facilities and 14 recycling operations.

While they clarified that it is not considering mothballing the mill at this stage, it confirmed that if no sustainable solution emerges during the consultation process, production will cease once existing orders are fulfilled. Operations are expected to continue only until the end of March 2026.

Mpact emphasised that the information disclosed has not yet been reviewed or reported on by its independent external auditors. The company added that further announcements will be made as the Section 189A consultation process progresses and as decisions regarding the mill’s future are finalised.