Photo by: Creamer Media
Paper and plastics packaging manufacturer Mpact has decided to discontinue its polyethylene terephthalate (PET) recycling operation, in Wadeville.
The company explained in a statement on Thursday that the recycled PET selling price was below the cash cost to produce the material and would remain so for the foreseeable future.
To date, recycled PET had been sold at a discount to virgin material in South Africa to encourage its adoption and use in food and beverage packaging.
Mpact Polymers said recycled PET was sold at a premium to virgin PET in many other countries, which recognise its environmental benefit and that the total cost of production was often higher than that of virgin material.
The virgin PET price had declined significantly owing to an oversupply globally. Recycled PET selling prices in South Africa had declined in line with the virgin price decline, owing to substitutability, even though there was no shortage of recycled PET supply.
Mpact’s Polymers business segment and the Industrial Development Corporation – a 31% shareholder in Mpact Polymers – were in the process of evaluating options for the business and its stakeholders.
Mpact Polymers made a loss before tax of R43-million in the six months ended June 30.