Mpact to retrench up to 377 workers at Springs paper mill amid import competition

Mpact's share price has dropped 5.6% in the last few trading days after announcing plans to retrench just less than 10% of its workforce at its Springs Paper Mill.

Mpact, the largest paper, packaging and recycling business in Southern Africa announced Tuesday its board had approved the start of retrenchment processes at the mill which would impact about 377 people. The group had employed 4 557 people in its 2024 financial year. 

The share price was trading 0.36% lower at R22.36 on Wednesday morning, while last Friday it opened at R22.44.

Mpact's board said the decision followed a deterioration in the mill's competitiveness. The mill is the only domestic producer of cartonboard and competes with imports from several countries. Major customers historically are major brand owners in the fast moving consumer goods, food & beverage and retail sectors.

The group said its largest customer had indicated it would instead import in the future. There was significant overcapacity in the global cartonboard market, a condition expected to persist for the foreseeable future, and with the current strength in the value of the rand, the mill's largest customers were able to import cartonboard at prices about 20% below the mill's cost of production, Mpact's directors said.

"Despite extensive efforts, Mpact is unable to bridge the cost gap and unlikely to secure sufficient demand from other customers at sustainable prices," they said.

The mill had generated R1.74 billion in revenue in the last reported financial year, of the group's R13.3bn revenue, and the mill's operating profit before tax came to R32 million. Mpact's annual results for the 2025 financial year are expected to be published on March 9, 2026.

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