South African packaging giant Mpact has announced the planned closure of its Springs Mill, with over 300 jobs at risk through a Section 189A retrenchment process. The mill, which currently employs 377 people, will continue operations until May 2026, completing all open orders before shutting down.
The retrenchment decision was approved by Mpact’s board in February 2026, following a sustained decline in the mill’s competitiveness. The Springs Mill is the country’s only domestic producer of cartonboard, facing stiff competition from imported products sold at prices roughly 20% below the mill’s production cost.
Reasons Behind the Closure
Global overcapacity in the cartonboard market, combined with a strong South African rand, has made it difficult for the mill to remain profitable. In January 2026, the mill’s largest customer announced it would shift its cartonboard procurement to imports, leaving Mpact unable to secure sufficient demand at sustainable prices.
Despite extensive efforts to reduce costs and retain clients, the company concluded that bridging the cost gap was not possible.
Financial Performance of Springs Mill
For the 2025 financial year, Springs Mill reported:
- Revenue: R1,753.3 million (2024: R1,739.5 million)
- Operating Profit: R2.0 million (2024: R32.1 million)
Mpact’s group performance showed resilience despite a challenging year:
- Revenue: R14 billion (up 5% from 2024)
- Net Asset Value per Share: R37.76 (up 6%)
- Headline Earnings per Share: 307 cents (down from 324 cents in 2024)
- Total Dividend per Share: 60 cents
CEO Statement
Bruce Strong, CEO of Mpact, commented:
“2025 was a demanding year, marked by sustained economic pressure and difficult trading conditions across several of our markets. While overall performance was mixed, we made progress in strengthening Mpact’s strategic position through disciplined capital investment, portfolio optimisation, and operational improvements.”
The group plans to focus on converting its asset base into stronger earnings, generating cash flow, and improving shareholder returns, while continuing to evaluate the full financial and operational implications of the mill closure.
Industry Context
The closure highlights challenges facing South Africa’s packaging and cartonboard sector:
- Weak domestic economy and infrastructure constraints
- Elevated geopolitical uncertainty impacting global trade
- Oversupply of containerboard and cartonboard globally
- Intense competition from imported products
While some sectors such as citrus exports showed strong growth, contributing to improved efficiencies across Mpact’s businesses, the closure of Springs Mill underscores the difficulties of operating in an energy- and capital-intensive industry with global pricing pressures.
The Mpact Springs Mill closure is a significant event for South Africa’s packaging industry, putting over 300 jobs at risk. The company’s strategic focus now is on portfolio optimisation, operational efficiency, and sustainable shareholder returns, while navigating the challenging global cartonboard market.
Key takeaway: Employees, unions, and industry stakeholders should monitor the retrenchment process closely as the company prepares for full closure by May 2026.
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