In a quiet industrial park outside Johannesburg, the hum of a paper mill is a reminder of an industry that once fed the nation’s newsrooms and supermarkets. Today, that hum is accompanied by concern: the International Trade Administration Commission (ITAC) has been asked by Minister of Trade, Industry and Competition Parks Tau to review the country’s trade policy on paper products.
The minister’s request, reported by BusinessTech, follows pleas from the two biggest local paper manufacturers, Sappi and Mondi, for higher tariffs on imported paper. They argue that cheap overseas paper is squeezing profit margins, especially in uncoated paper, newsprint, packaging and tissue segments.
Tariffs are taxes on imported goods. Raising them makes foreign products more expensive, which can give domestic producers a price advantage. The review will consider what “trade policy instrument”, such as a tariff increase, quota or anti-dumping measure, could help the sector become more sustainable and resilient.
Local manufacturers say they are under “tremendous strain” from three forces. First, imported paper is often cheaper because producers abroad benefit from lower electricity and transport costs. Second, South Africa’s own electricity tariffs have roughly doubled over the past decade, driving up production costs. Third, the shift to digital media has reduced demand for print paper, leaving factories with excess capacity.
The sector employs about 35 000 people and has attracted roughly R33 billion in investment over the last seven years, according to the Department of Trade, Industry and Competition (DTIC). If the challenges are not addressed, the minister warned, the economy could lose industrial investment, jobs and the livelihood of rural communities that depend on the industry.
Sappi, which reported a loss of roughly R2.77 billion in the last financial year, said its selling price fell by about 5 percent because of the competition. CEO Steve Binnie told investors that while the company remains “a strong business with competitive assets”, the flood of low-priced imports “deserves greater policy attention”.
For small business owners in the retail and consumer space, the outcome of the review matters. Higher tariffs could raise the cost of paper supplies, from packaging to office stationery, affecting margins for retailers, printers and food service operators. Conversely, a policy that stabilises local production might protect jobs in the supply chain and keep domestic prices more predictable.
While the review is still in its early stages, the minister’s request signals that the government is taking the manufacturers’ warnings seriously. The next steps will involve ITAC consulting industry stakeholders, analysing import data and recommending a policy option to the minister.
In the meantime, companies like Sappi and Mondi are likely to continue lobbying for protection, while importers watch for any sign of a tariff hike that could affect their cost structures.
How ITAC actually decides on a tariff
The International Trade Administration Commission does not simply grant a tariff increase because a domestic industry asks for one. It runs a formal investigation that typically includes analysing import volumes and pricing, inviting submissions from affected importers, retailers and consumer groups, and weighing the benefit to domestic producers against the higher costs that downstream industries and consumers would bear. That process can take many months from a minister’s initial request to a final tariff recommendation, which is why Sappi and Mondi’s relief, if any is granted, is unlikely to arrive quickly enough to offset the losses they are reporting today.
South Africa’s paper and packaging sector competes globally against producers in countries with lower electricity costs and, in some cases, government subsidies for pulp and paper production, a structural disadvantage that a tariff can offset at the border but cannot fix at the level of Sappi and Mondi’s own production costs.
