South Africa’s packaging sector has suffered a major setback after Mpact closed the BM6 coated paperboard machine at its Springs mill in Gauteng, ending the country’s only domestic production of paperboard used for takeaway food packaging and consumer goods. The decision reflects mounting pressure from lower-cost imports, rising municipal utility tariffs and operating challenges that made local production increasingly uncompetitive.

The BM6 line supplied board for several well-known consumer applications, including foodservice and branded retail packaging. According to Mpact, global oversupply allowed foreign producers to offer paperboard at prices around 20% below the company’s production costs. That price gap placed the South African facility at a structural disadvantage, even before local energy, water and infrastructure costs were considered.

The situation worsened in January 2026 when the mill’s largest customer informed Mpact that it would stop buying locally produced paperboard and switch to imported alternatives. With demand falling below the level needed to sustain operations, the company concluded that continued production on BM6 was no longer commercially viable.

The closure shows how packaging capacity depends not only on market demand, but also on energy reliability, trade conditions and the ability of local manufacturers to compete with global oversupply.

The loss is significant for South Africa’s packaging value chain. Imported supply remains available, but the closure reduces domestic industrial capability in a specialised segment that supported food-to-go, consumer goods and branded paperboard packaging. It also increases reliance on foreign suppliers for materials that were previously produced locally.

Mpact said the competitiveness of the Springs mill had been weakened by years of high electricity and water tariffs from the City of Ekurhuleni, combined with recurring power disruptions that affected operational efficiency. Unlike some of the group’s other sites, Springs remained heavily dependent on municipal infrastructure and lacked alternative water and energy sources that could reduce exposure to rising utility costs.

The contrast with Mpact’s other operations is revealing. The company has invested around R2 billion in its Felixton and Mkhondo mills, facilities that benefit from access to natural water resources and alternative energy systems. In 2025, Mpact expanded its renewable energy portfolio with approximately 18MW of solar photovoltaic capacity and secured a five-year renewable power purchase agreement. These investments have helped improve resilience and reduce dependence on municipal systems.

• Import pressure: cheaper foreign paperboard reduced the competitiveness of local production.
• Infrastructure costs: electricity, water and service reliability played a major role in the mill’s economics.
• Supply chain risk: South Africa now depends more heavily on imports for this paperboard category.

The financial pressure on Springs had become increasingly visible. Although the unit continued to generate revenue, operating profit declined sharply, illustrating how thin margins had become. The closure also carries employment consequences, with a Section 189A consultation process affecting workers at the site.

For policymakers, the decision raises broader questions about industrial policy and packaging self-sufficiency. South Africa, like many African economies, is seeking to expand local value addition, manufacturing employment and import substitution. Yet these ambitions require competitive infrastructure, predictable operating conditions and trade policies capable of supporting domestic producers when global markets are distorted by oversupply.

The case also highlights the difficult balance between local manufacturing protection and downstream affordability. Protective tariffs may help preserve domestic industrial capacity, but packaging converters and brand owners often benefit from cheaper imported inputs. Finding the right balance will be essential if South Africa wants to retain value-added packaging production without raising costs across the consumer goods sector.

From a sustainability perspective, the closure is equally complex. Local production can shorten supply chains and support regional circular economy development, but only if mills can operate efficiently and invest in lower-carbon energy, water resilience and modern production systems. Facilities without access to affordable infrastructure may struggle to fund the transition required for long-term competitiveness.

Mpact’s Springs closure is therefore more than the loss of a single paperboard machine. It is a warning about the pressures facing African manufacturing as trade flows, infrastructure challenges and sustainability investment needs reshape industrial economics. For the packaging sector, the episode underlines the need for resilient local capacity, fair competition and operating environments that allow domestic producers to compete in an increasingly global market.

Image concept: a South African paperboard mill with a closed production line, imported paperboard rolls, foodservice packaging samples, solar panels and industrial workers discussing manufacturing resilience and packaging supply chains.