Paper and packaging group Mpact will close its Springs Mill operations after it lost its largest customers, with about 400 employees set to be retrenched.
Mpact said the decision follows a “sustained deterioration in the mill’s competitiveness”.
Based in Gauteng, Springs Mill has a production capacity of 137,000 tonnes per annum. It specialises in manufacturing white-lined coated carton board, laminated board, and boards for industrial applications, primarily using recycled fibre sourced from Mpact Recycling. These products are used in various applications, including food and industrial packaging, as well as other industrial uses such as ceiling boards.
The Springs Mill, which has 377 employees, is the only domestic producer of cartonboard and competes directly with imports from several countries. Mpact said due to significant overcapacity in the global cartonboard market, a condition expected to persist for the foreseeable future, and the current value of the rand, the mill’s largest customers are able to import cartonboard at prices about 20% below the mill’s cost of production.
“This has led to a decline in demand for the mill’s products, and in January, the mill’s largest customer notified Mpact that it will no longer procure its cartonboard requirements through the mill and will instead procure through imports in the future.”
Mpact said despite extensive efforts, it is unable to bridge the cost gap and unlikely to secure sufficient demand from other customers at sustainable prices. The mill is likely to run until the end of March. At the end of December 2024, Springs Mill had assets of R469m and current liabilities of R297m. Revenue was R1.7bn.
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