Mpact invests US$69M to upgrade its Mkhondo paper mill in Mpumalanga

SOUTH AFRICA – The board of paper and plastic packaging producer and recycler Mpact has approved a US$ 69.30 million (R1.2-billion) investment to upgrade Mkhondo paper mill, in Mpumalanga.

According to Mpact, this investment will improve the mill’s paper machine, increasing its capacity by about 10 000 tonnes/year to 142 000 tonnes/year.

This transformative project aligns with Mpact’s strategy to pursue organic growth and is expected to create significant value for shareholders and other stakeholders.

Upgrades will also be made to the pulping section, which will increase the wood pulping capacity by about 55 000 tonnes/year to 110 000 tonnes/year.

This will enable the migration to a higher proportion of Bayplex production, with improved properties, enhancing Mpact’s ability to meet growing customer demand.

The project is aimed at ensuring can meet the increasing demand for quality, sustainable, fresh produce packaging solutions, driven by robust growth in the South African export fruit sector.

“Repositioned to become a predominantly virgin fiber mill, with an enhanced and flexible product range, the Mkhondo mill will benefit from improved cost competitiveness and reduced environmental footprint, while enabling it to respond to the strong domestic and international demand for high-quality semi-chemical (SC) fluting,” Mpact points out.

Mpact’s SC fluting, which is marketed under the brand name Bayplex, is a high-performance virgin containerboard grade produced at the Mill.

Bayplex is required to produce corrugated cartons for demanding cold-chain applications due to its high strength, moisture resistance, and durability, and is widely used in fresh fruit, other agricultural exports, and specialized applications.

The approval of this project highlights the Mpact Board’s confidence in the growth prospects of the South African fresh produce sector.

“Our R1.2-billion investment in the Mkhondo mill demonstrates our strong belief in the growth prospects of particularly our fruit exporters who need our containerboard, and Mpact’s successful investment and project management record,” notes Mpact chairperson Tony Phillips.

“What’s exciting is that the improved mill also gives us the technical flexibility to expand into new markets by producing pulp by-products for the industrial market such as the sodium lignosulfonate (SLS) powder, most of which we will sell into the export market.”

As part of the project, Mpact will install a new spray drying facility to beneficiate the additional by-product generated from the wood pulping process.

This will enable the mill to produce up to 35 000 tonnes/year of SLS powder, which is used as a concrete additive in the construction industry, besides other applications.

The upgrades are scheduled to be concluded during the first half of 2025 and the project is expected to generate an internal rate of return of more than 20%.

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