Paper and plastics packaging and recycling business Mpact has acquired a strategic equity shareholding in vertical tank manufacturer Africa Tanks to mitigate against drought, watershedding and deteriorating infrastructure.

“The broader infrastructure and related water supply challenges are likely to persist for several years, and demand for water storage and rainwater harvesting is expected to continue growing,” says Mpact CEO Bruce Strong.

The equity investment is aimed at accelerating Africa Tank’s growth and entry into the Eastern and Western Cape. It will provide Africa Tanks, which was founded in 2017 in Cullinan, Gauteng, with the capital required to achieve economies of scale and accelerate its growth into these markets, thereby becoming a national supplier.

The percentage of households with piped water that experienced water interruptions lasting more than two days at a time, or 15 days in total over a year, increased to 35.8% in 2023 from 24.3% in 2012.

There are also many households in areas without access to piped water supply that rely on periodic deliveries of water by tanker.

“We aim to invest in growth markets that meet vital needs. South Africa is a dry country, with an average rainfall of 465 mm a year, and with inadequate water infrastructure. People in many cities, towns and regions face ongoing water supply challenges,” Strong says.

“Just as loadshedding drove the rapid adoption of electricity self-generation, we foresee a large and rapidly growing market for high-quality water tanks as households and institutions invest in water security to ensure continuity of supply,” he adds.

There has been an increase in water shortages linked to the power crisis or adverse weather events over the past few years, but, as the Green and Blue Drop reports also show, there has been a decline in water quality owing to contamination by sewage and bacteria in some parts of the country, leading to waterborne diseases.

“Water supply is increasingly uncertain owing to a combination of factors, including deteriorating infrastructure, environmental degradation, persistent droughts and disparities in water and sanitation access. Therefore, there is a need for reliable water storage that meets strict safety and hygiene standards,” says Africa Tanks director Craig Forbes.

Africa Tanks uses state-of-the-art extrusion blow moulding technology to efficiently manufacture three-layer tanks.

“Having Mpact as an equity partner gives us the necessary capital to expand the business and address the urgent need for safe and reliable water storage solutions across Southern Africa, as well as the opportunity to leverage Mpact’s technology, expertise and national footprint,” he says.

Mpact’s vision is to build a sustainable business that also contributes to society through innovation and investments in businesses that respond to society’s needs, says Strong.

“Our investment in Africa Tanks aligns with our strategy to pivot towards a circular economy while investing in areas where significant opportunities for growth and innovation exist,” he notes.

VERSAPAK DISPOSAL
Meanwhile, Mpact has entered into an agreement to sell its styrene and polyethylene terephthalate products manufacturer Versapak business to Greenpath Recycling for R267-million.

Greenpath is a wholly-owned subsidiary of plastic packaging products manufacturer Sinica.

Versapak had a net asset value of R239-million and posted profits before tax of R175-million for the financial year ended December 31, 2023.

Following a strategic review in 2021, Mpact decided to sell Versapak as part of its ongoing portfolio optimisation plan. The rationale for the decision was that the products of Versapak are not fully aligned with Mpact's strategy.

The sale is conditional on approval by competition authorities and Mpact anticipates the effective date to be in the fourth quarter of this year.