British American Tobacco will shut down its only remaining manufacturing facility in South Africa by the end of 2026, marking the end of local cigarette production after more than seven decades of operations.
The company has informed authorities in the Lesedi municipality that its Heidelberg factory will be mothballed, with formal consultations with workers and unions already underway. BAT said the process, conducted in line with Section 189A of the Labour Relations Act, is expected to conclude by March 2026.
Once the closure is completed, BAT will no longer manufacture cigarettes locally and will instead supply the South African market through imports, although the company will retain its secondary listing on the Johannesburg Stock Exchange and continue selling its products domestically.
BAT said the decision was driven primarily by the rapid expansion of the illicit cigarette trade, which it estimates now accounts for nearly 75 percent of South Africa’s tobacco market. The Heidelberg plant is currently operating at just 35 percent of capacity, making continued production commercially unsustainable.
“This is an incredibly difficult day for BATSA and for the approximately 230 employees and families who may be affected,” said Johnny Moloto, head of corporate and regulatory affairs at BAT Sub-Saharan Africa. “These are skilled, dedicated people who are being impacted by an illicit market that operates outside the regulatory framework.”
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Moloto said the company had repeatedly raised concerns with government and law enforcement agencies over the past decade, warning that weak enforcement was eroding the legitimate tobacco market and destroying jobs.
BAT also blamed several policy decisions for worsening the situation, including the 2020 tobacco sales ban during the Covid-19 pandemic, from which the legal market never fully recovered, as well as above-inflation excise tax increases that widened the price gap between legal and illicit cigarettes.
The company further warned that proposed tobacco legislation currently before Parliament could intensify illicit trade rather than curb it. BAT cited a presentation by the South African Revenue Service to Parliament last year in which the tax authority acknowledged that the proposed laws could have unintended consequences for enforcement.
“We have tried everything to avoid this outcome,” Moloto said. “The Heidelberg facility has been part of the community since 1975, and we implemented multiple efficiency initiatives over the years. But when three-quarters of your market is illicit, there is a limit to what any company can do. We’ve reached that limit.”
BAT cautioned that the closure would have broader economic consequences beyond the loss of factory jobs, affecting suppliers, logistics companies and contractors that depend on the facility.
Despite the shutdown, the group stressed that it is not exiting South Africa entirely and will continue operating commercially through imported products.
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