Mpact to shut Springs Cartonboard Mill as global oversupply and strong rand bite

SOUTH AFRICA – JSE-listed packaging and recycling group Mpact has announced plans to halt operations at its Springs Mill, South Africa’s only producer of cartonboard, once all outstanding customer orders are fulfilled towards the end of March.

The decision underscores mounting pressure on local cartonboard manufacturing as global overcapacity, weak demand, and currency dynamics tilt the market decisively in favour of imports.

Mpact says the Springs Mill has suffered a sustained deterioration in competitiveness, driven largely by a prolonged surplus of cartonboard in international markets.

With global producers facing excess capacity, imported cartonboard has become increasingly aggressive on price, eroding the mill’s position in both domestic and regional supply chains.

The Springs facility employs 377 people and has an annual production capacity of approximately 137,000 tonnes of white-lined coated cartonboard, laminated board and industrial grades.

Production is largely based on recycled fibre supplied by Mpact Recycling, aligning the mill with the group’s broader circular economy strategy.

However, the company notes that these sustainability credentials have not been enough to offset widening cost disparities.

According to Mpact, the strengthening of the rand has further compounded the challenge, enabling the mill’s largest customers to import cartonboard at prices around 20% below Springs’ cost of production.

Demand has consequently weakened, culminating in a major blow in January when the mill’s largest customer informed Mpact it would cease local procurement in favour of imports.

“Despite extensive efforts, Mpact is unable to bridge the cost gap and is unlikely to secure sufficient demand from other customers at sustainable prices,” the company said, adding that the global cartonboard oversupply is expected to persist for the foreseeable future.

In response, Mpact has initiated a Section 189A consultation process in line with South Africa’s Labour Relations Act, opening formal engagement with affected employees and stakeholders regarding the proposed closure.

The Springs announcement comes amid broader restructuring and repositioning efforts across the packaging and paper sector, both locally and internationally.

Global cartonboard producers in Europe and Asia have announced temporary shutdowns, capacity rationalization or extended maintenance stoppages in recent months as demand growth lags behind capacity additions.

Regionally, converters and brand owners are increasingly leveraging imports to manage costs in an inflation-sensitive consumer environment.

Despite the setback at Springs, Mpact continues to invest in adjacent sustainability-focused initiatives.

In October last year, its waste management division partnered with Zeda Limited, operator of the Avis car rental brand in Southern Africa, to deploy comprehensive waste diversion and materials management systems at selected sites.

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