The Reinvention of South Africa’s Pulp and Paper Industry

How sustainability concerns shaped the global paper industry

In 1972, a report titled The Limits to Growth concluded that unless societies fundamentally changed how they consumed resources and managed environmental degradation, the world would eventually face severe constraints on industrial production, economic growth, and human wellbeing. This sparked debates and initiatives to address the scarcity and limited availability of resources.

Organisations and governments responded by embarking on resource preservation initiatives, such as instructing staff to use and write on the reverse side of paper. This drive quickly faded over time. The advent of the internet, at the beginning of the 21 st century, made it natural to consume less paper. It transformed the whole communication industry, with digitalisation significantly reducing the demand for print, newspapers and magazines.

How the South African paper and pulp industry reinvented its business models, aligning with global trends

The Who Owns Whom report on the paper pulp and paper products in South Africa illustrates this phenomenon in measurable terms, stating that wood pulp production declined at a compound annual rate of 2.0% between 2014 and 2025,representing a 21.9% decrease.

The capital-intensive nature of establishing paper mills resulted in a concentrated South African pulp and paper manufacturing industry, dominated by two large companies i.e. Sappi and Mondi. They also had to realign their product portfolios in response to market dynamics, shifting to cardboard and paper packaging, where demand remained resilient, as opposed to newspaper print, which was decimated. However, this re-balancing of traditional paper products proved insufficient. Investment is increasingly focused on research and innovation to find high-value products such as dissolved wood pulp (DWP), which converts the pulp into viscose and lyocell fibres, suitable for use in textiles.

Sappi’s DWP business as a share of company revenue has grown to 22% in 2024, up from 17% in 2020. Sappi also successfully repurposed its US$170m Cloquet Mill in Minnesota, USA, batch digester-based kraft pulp line to produce high-value dissolving pulp. Today, the majority of Sappi’s DWP is consumed in apparel, home textiles, and non-woven products, primarily through conversion into viscose and lyocell fibres.

Mondi chose a different route, focusing on packaging papers and containerboard. This strategy and international factor shifts, respectively in production and demand, have proven to be less successful. Its demerged Mpact company had to close its cardboard line mainly due to cheap imports.

Structural challenges in the South African paper manufacturing industry

Despite some success achieved by the industry, Who Owns Whom highlights continued inefficiencies in rail and port services, power outages, and water supply interruptions, compounding the decline in demand for certain paper grades. The graph here shows the decline in recent years.

The drop from 2024, viewed in conjunction with the recent influx of cheap imports, is on nominal Rand values of sales, not quantities. The drop in quantities would show a negative long-term trend at 2% per annum. The decline in quantities is steeper than what is shown here.

Despite some success achieved by the industry, Who Owns Whom highlights continued inefficiencies in rail and port services, power outages, and water supply interruptions, compounding the decline in demand for certain paper grades. The graph here shows the decline in recent years. The drop from 2024, viewed in conjunction with the recent influx of cheap imports, is on nominal Rand values of sales, not quantities. The drop in quantities would show a negative long-term trend at 2% per annum. The decline in quantities is steeper than what is shown here.

The phenomenon of cheap imports is felt globally, and in many industries, some more than others, such as the motor industry, more harshly than others. Ursula von der Leyen, head of the EU, said in 2024 that Europe must not become a dumping ground for Chinese overcapacity, referring to electric vehicles, batteries, steel, solar panels, and other subsidised manufactured goods.

The future of paper manufacturing in South Africa

Although South Africa’s pulp and paper industry has demonstrated remarkable resilience, the country should adopt a stance similar to that of the EU regarding free trade, which requires appropriate countermeasures in instances of subsidisation in the exporting country.

The paper pulp and paper products industry in South Africa seems to be weathering the storm, showing innovation and diversification; however, distortions in fair trade need to be addressed up front, not when the horse has bolted, to avoid painful consequences.