Investor Site Visit

Felixton Paper Mill29 May 2019

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3

OVERVIEW

Plastics

Mpact

Primary product categories

Recovered paper collection and recycling

Packaging and industrial papers such as cartonboard and

containerboard

Corrugated packaging

Paper bags, sacks and quick service restaurant (QSR) packaging

Primary product categories

PET bottle-to-bottle recycling

PET bottles and preforms, hot fill bottles, PET jars and closures

Large injection moulded containers

Trays, fast food containers and clear plastic films

Paper

CENTRES OF EXCELLENCE

Human Resources, Safety, Health, Environment, Energy

SHARED SERVICES

Finance, IS&T, Stellenbosch R&D

The largest paper and plastics packaging and

recycling company in Southern Africa

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Leading market positions with scale

to enable competitiveness on a

decentralised basis

5 062EMPLOYEES

Level 1*B-BBEE

OVERVIEW

40SITES

RECYCLING CENTRES

*Mpact Operations Pty (Ltd)

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Mpact’s integrated business model is uniquely focused on

closing the loop in plastic and paper packaging through

recycling and beneficiation of recyclables

OVERVIEW

6

OVERVIEW

Over R1.6 billion invested over past three

years to Reduce, Reuse and Recycle

Remade acquisition

R130m

R130 million

Complements Mpact Recycling to expand collections of paper and plastic nationally

These initiatives are in support of the Mpact Polymers rPET operation and the Felixton paper mill

upgrade. Strategic objectives are being met.

Felixton Paper Mill rebuild

R800m

R800 million

Enhanced quality and product offering

Advanced lightweight containerboard

Increase capacity by 60,000 tonnes.

Replacement of virgin bagasse fibre with additional 100,000 tons of recycled fibre

Liquid Packaging recycling plant

R50m

New corrugator in PE

R150m

R150 million

Increase in capacity to service the growing citrus volumes in the region.

Ability to run lighter and stronger

Plastics converting projects

R155m

R140 million

New 5500T injection mould machine export jumbo bins; new integrated wheelie bin injection moulding

Recycling extrusion line for recovered crates and wheelie bins

2 new lightweight closure lines completed in 2017

rPET recycling plant

R350m

R350 million

PET recycling operation which produces rPET plastic for food grade packaging.

New washing equipment (R35m) has been ordered and is expected to be commissioned early 2019.

R50 million

Additional source of recycled fibre to the Spring’s paper mill.

Post-consumer liquid packaging feedstock still sub-optimum

reduce

recycle

recycle

recycle

recycle

reduce reuse

recycle

reduce

Paper

Business

8

76%

Paper Business Overview

Key products : Cartonboard

: Containerboard

: Retail ready packaging

: Regular slotted cartons

: POS packaging and displays

: Die-cut solutions

: Paper bags and sacks

: Quick service restaurant packaging

Key customers : Packaging converters (containerboard and cartonboard)

: Agricultural producers

: FMCG companies

: Quick service restaurants

: Other consumer and industrial packaging companies

Leader in recovered paper collection, production of

cartonboard, recycled containerboard and corrugated

packaging

Divisions : Recycling (17)

: Paper Manufacturing (3)

: Paper converting (corrugated and other) (13)

External Revenue (2018)

R8.3bn

EBIT (2018)

R694m

74%

PAPER BUSINESS

Paper bags, sacks and Quick

service restaurant (QSR)

packaging

Standard and customised cases, fruit and

vegetable trays, retail ready packaging

Cartonboard,

containerboard

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Paper Manufacturing

Geographic footprint Customers

Production capacity in kt

Additionally, Mpact distributes all containerboard products of Mondi Group’s Richards Bay Mill, selling

mainly into South Africa and selected markets in sub-Saharan Africa and Indian Ocean Islands

Mill/Plant Main productsCapacity 2019

(ktpa)

Piet Retief Linerboard and semi-chemical fluting 125

Felixton Fully recycled linerboard and fluting 200 – 215*

Springs Cartonboard and specialities 145

Containerboard and

cartonboard packaging

converters (internal and

external)

Geographic sales

Durban

Port Elizabeth

East LondonCape Town

Johannesburg

Springs Piet Retief

Felixton

Domestic,

86%

Richards Bay

Export,

14%

PAPER BUSINESS

*grammage dependent

Felixton

Paper Mill

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FELIXTON MILL

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Mill with combination of bagasse and recycled fibre

History of the Felixton Paper Mill

1950 1960 1970 1980 2020201020001990

1953 1973 1979

1984

2007

2011

Felixton Paper Mill was built

as Ngoye Board Mills,

2.2m wide machine

A new paper

machine was built,

4.5m wide

The Mill was purchased by

the Huletts Group

The Mill was purchased

by Mondi

Mondi demerged

from Anglo

American

MPSA demerged from

Mondi and listed on the

JSE as Mpact

FELIXTON MILL

2005Formation of Mondi

Packaging South Africa

(MPSA) with Shanduka as

the black empowerment

shareholder

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Investments through the years

FELIXTON MILL

1996 2020

1996Bagasse

washing plant

R30m

1998New headbox

and cleaners

R70m

2004Bagasse belt

washer R40m

2005Cationic starch

cooker R10m

2007Khulisa 1 RCF

Plant R80m

2008Paper Machine

Rebuild

(Khulisa 1)

R170m

2011Effluent Clarifier

R26m

2013New fully

automated

winder R40m

2015Phase 1

Khulisa 2.15

2017Phase 2

Khulisa 2.15

2017Increased

recycled fibre

storage facility

R25m

|------- R800m -------|

2000 2010

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Project Khulisa 2.15 – R800m investment

Transformation of the Felixton Paper Mill

• Increased capacity by 60,000 tonnes to 215,000 tonnes.

• Conversion from using bagasse fibre in our products to a

fully recycled fibre product.

• Improved product quality and cost competitiveness.

Bagasse Fibre Recycled Fibre

FELIXTON MILL

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Strategic Project Considerations

FELIXTON MILL

Cost competitiveness - Scale, energy efficiency and other variable costs.

Domestic market

demands

- Products: high quality lightweight recycled fluting and liners.

- Capacity: to meet growth requirements.

Fibre availability - Uncertainty regarding bagasse availability and supply (green energy

and drought).

Environmental footprint - Improve water and energy usage, effluent quality and increased

recycling.

Latest technology - Reviewed by international industry experts and major international

machine suppliers.

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Project benefits

› Attractive return on capital.

› Increased capacity by up to 60 000 tonnes:

- to between 200 000 and 215 000 tonnes grammage mix dependent.

› Enhanced paper strength properties (two-ply sheet and starch film size press).

› Improved cost and energy benefits positioning the mill as a low-cost paper

producer.

› Provides light weight production capability in-line with international trends.

› Environmental benefits include reduction in energy, water, COD and CO2 .

› Qualified for Section 12I tax incentive.

› Automated warehouse - efficient storage, stock control and productivity.

FELIXTON MILL

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Recovered fibre pulping process

FELIXTON MILL

Pulping Screening & Cleaning Fibre Preparation

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Paper making process

FELIXTON MILL

Sheet Formation & Dewatering Starch Application & Drying Winding, Finishing & Storage

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FELIXTON MILL 2015 PRE-REBUILD

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Automated Product Storage Warehouse

Production / Warehouse Interface

Warehouse Management System

Crane

Management

System

Operator

Interface

Roll Movement

System

Roll movement

Roll data

Set data

Shipping lists

Roll data change

Transport orders

Shipping lists

Inventory of storage

Status of the system

KPI (Input/Output)

Roll set information

Information of storage

and retrieval points

FELIXTON MILL

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Operational excellence in action

• Completed without injuries, on

time and within budget

• Project shut 46 days

• Start-up July 2017

• Focus on paper machine

availability and paper quality

• Head count reduced from 230 to

200 permanent employees

following closure of bagasse pulp

plant

FELIXTON MILL

50

60

70

80

90

100

110

Jul-

17

Sep

-17

No

v-1

7

Jan

-18

Mar

-18

May

-18

Jul-

18

Sep

-18

No

v-1

8

Jan

-19

Mar

-19

May

-19

Des

ign

Pap

er

Mac

hin

e A

ctiv

ity

(In

de

xed

)

Production Run Rates Per Product

Product 1 Product 2 Product 3

30%

40%

50%

60%

70%

80%

90%

100%

Ju

l-17

Se

p-1

7

No

v-1

7

Ja

n-1

8

Ma

r-1

8

Ma

y-1

8

Ju

l-18

Se

p-1

8

No

v-1

8

Ja

n-1

9

Ma

r-1

9

Ma

y-1

9

%

Eff

icie

ncy o

f P

ap

er

Mach

ine

Overall Equipment Efficiency

Material Efficiency (Quality)Time Efficiency (Availability) OEE Tend

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Project KhulisaPaper machine speeds achieved against design

FELIXTON MILL

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Energy benefits

• Equipment selection process

considered energy efficiency

• Exit from bagasse reduced electrical

and steam energy usage per unit

• Achieving 12I Tax Incentive Allowance

requirements of minimum 15% energy

reduction against baseline period

FELIXTON MILL

70

75

80

85

90

95

100

105

2012 2013 2014 2015 2016 2017 2018 2019

To

tal

En

erg

y I

np

ut

per

ton

ne

of

pap

er

pro

du

ced

(In

dexed

GJ/T

)

Total Energy Consumption

70

75

80

85

90

95

100

105

110

2012 2013 2014 2015 2016 2017 2018 2019

Ele

ctr

icit

y c

on

su

mp

tio

n p

er

ton

ne

of

pap

er

pro

du

ced

(In

dexed

kW

h/T

)

Electricity Consumption

50

60

70

80

90

100

110

2012 2013 2014 2015 2016 2017 2018 2019

To

tal

carb

on

dio

xid

e e

mit

ted

(In

dexed

to

nn

es

of

carb

on

/ t

on

ne

of

pap

er

pro

du

ced

)

Carbon Reduction

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Environmental performance

• Project design included the reuse of water

• Culture of continuous improvement of water

utilisation

• State of the art equipment ensures minimum

fibre loss thus improving wastewater quality

FELIXTON MILL

0

20

40

60

80

100

120

2014 2015 2016 2017 2018 2019

To

tal S

usp

en

ded

So

lid

s in

Waste

waste

r (I

nd

exed

To

nn

es/d

ay)

Wastewater Quality Improvement

50

60

70

80

90

100

110

120

2014 2015 2016 2017 2018 2019

Wate

r C

on

su

mp

tio

n p

er

ton

ne

of

pap

er

pro

du

ced

(In

dexed

kL

/T)

Water Consumption

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• Significantly enhanced paper profile

with substantially reduced mass and

moisture variations across the width

of the sheet.

• This is critical for box manufacturing

and enhances converter

performance.

• Overall improvement in paper

strength leads to a stronger box with

lighter weight paper.

Paper quality enhancements

FELIXTON MILL

Paper Profile

Variation (cross

direction 2 sigma)

Flat Crush

Resistance

(CMT)

Compressive

Strength

(SCT)

% Improvement 82% 10-12% 15-20%

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Mpact Paper and Packaging Innovation Centre

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

• Pulping

• Fibre morphology

• Chemical

optimisation

• Food Safety

• Benchmarking

• Competitive database

• Predictive testing

• Printing

• Correlation

between paper and

board properties

• Testing of boxes

to meet end user

performance

requirements

Paper

making

Paper

testing

Box

testing

Board

testing

FELIXTON MILL

Recycling

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Recycling

making a

difference

RECYCLING

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Recycling Overview

Staff numbers

Employees 626 (permanent)

Raw materials

Recycling Used and discarded paper and plastic

Products

Recycling Bales corrugated boxes, old

newspapers and magazines, office

papers and mixed papers, bottle glass,

cans, PET, LDPE, HDPE, PP and

liquid packaging.

Geographic Footprint - Recycling

Volumes

Recycling 630,000 tonnes in 2018

623,000 tonnes in 2017

607,000 tonnes in 2016

RECYCLING

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Nature of Recycling Business

Collecting recyclable

material is a local activity

Characterised by SMME's

who depend on reliable

off-take and prompt

payment

Provide a service in exchange

for access to material

• Technical advice

• Supply equipment – Mpact placed over

100 balers with dealers

• Reliable market – take all paper grades,

plastic etc.

Strong dependence on

good logistics

Some materials have become

globally traded commodities

Two main types of business

• Pre-consumer collections

• Post-consumer collections

RECYCLING

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Business objective

To provide our mills and operations with the

right quantity of material for recycling, at a

price and quality to maintain their

competitiveness.

RECYCLING

Recycling Business Overview

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Recycling Business Model

Paper Mills

and Polymers

Dealers

Pre-Consumer

Post-

Consumer

- Schools

- Offices

- Churches

- Kerbside

- Malls

- others

Independent

Collectors

Owner

Drivers

Reclaimers

Buy-Back

Centres

Mpact

Recycling

Branches

Tra

ns

po

rters

RECYCLING

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Recycling preparation for Felixton & rPET

2013 2014 2015 2016 2020201920182017

2014Investment in

equipment such as

balers, bins and

vehicles allowing us to

expand our collection

footprint

RECYCLING

2016Remade

acquisition –

allowing us to

extend our branch

network from 7 to

16 branches

2016 - 2019Springs RCF storage upgrade (3 phases -53 000m2 )

2019Pinetown branch –

allowing us to expand

our collection footprint

and now up to 17

branches

2017Felixton RCF storage upgrade

expansion (19 200m2)

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Key developments in global recovered

paper market

China used to import 45%-50% of globally traded recovered paper (26 million tonnes)*

Current Chinese imports for recovered paper estimated 11-12 million tonnes*

Environmental pressures

› National Sword 2017 – inspections especially around plastics

› Blue Sky 2018 – inspections; increased quality standards; quotas restricted

Consequence

› Recovered fibre had to find a new home

› Prices have dropped

› Leading to reduced exports from South Africa

RECYCLING

* RISI

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Partnerships

RECYCLING

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RECYCLING

Safety, health &

wellness and CSI

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CEO’s SHE PHILOSOPHY

ALL injuries, occupational illnesses, safety and environmental incidents are preventable

and our target for them is ZERO

SAFETY

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Mpact’s safety systems rely on three levels of intervention:

Primary and secondary interventions are guided by, and comply with, the Occupational Health and

Safety Act. Tertiary interventions are Mpact initiatives to lead change in safety culture.

Mpact’s Safety Structure

SAFETY

Primary Secondary Tertiary

Physical interventions to

provide a safe working

environment

Safety systems that control the

way people interact with work

hazards

Creating a safety culture

.WELL TEAM WHAT DO

YOU THINK ABOUT

THIS SAFETY

SITUATION

CULTURE GROWS

THROUGH

COMMUNICATION

AND FINDING

SHARED VALUES

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Mpact’s Safety Culture

SAFETY

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Working with the community in which we

operate

Felixton CSI Projects

› Career day for local schools

› Wellness days for local community

› Community garden project

› Water tank installation for community farmers

› Annual “Back to School” stationary collection

› “Build a home” project

CSI