The SA Federation of Trade Unions (Saftu) said the proposed closure of British American Tobacco (BAT) is the latest example of big corporations shutting down local operations, warning this trend is steadily turning South Africa into a warehouse economy.
It also called on parliament to not pass the Tobacco Control Bill in its current form, as it would weaken legal tobacco producers while strengthening illicit and criminal operators. The bill, if passed, would accelerate factory closures and “finish off thousands of remaining manufacturing jobs”, Saftu general secretary Zwelinzima Vavi said in Johannesburg on Thursday.
He was briefing the media following the labour federation’s meeting with BAT regarding the proposed closure of its Heidelberg manufacturing plant.
The decision by the London- and Johannesburg-listed company will result in the group not manufacturing cigarettes locally for the first time in more than 50 years, resorting to imports to serve the South African market.
BATS, which produces popular brands such as Peter Stuyvesant, Pall Mall and Dunhill, recently informed the political leadership of the Lesedi municipality, where its Heidelberg manufacturing facility is located, that it would close the plant by the end of this year. BAT blamed the decision on the proliferation of illegal cigarettes, which it said now accounts for 75% of the market.
Vavi characterised the proliferation of illegal cigarettes as the “total murder of the economy”. He said the proposed closure threatened 200 direct jobs and thousands of indirect jobs.
The country was being turned into a “warehouse economy”, as corporations had steadily closed factories and relocated production overseas or to neighbouring countries, while keeping distribution and sales networks in the country.
“This is deindustrialisation by design. [BAT’s proposed closure] mirrors Goodyear closing its tyre plant in Kariega, while retaining distribution networks,” Vavi said, while blaming the effect of sin taxes, saying since 2014 they had increased by about 88%.
Illicit cigarette manufacturers do not pay excise tax to the SA Revenue Service (Sars), enabling them to undercut the prices charged by companies that are compliant.
The illicit trade costs Sars R28bn a year, according to BAT.
Saftu wanted parliament to not pass the Tobacco Control Bill and engage workers first.
Among other things, the bill also proposes introducing graphic health warnings and plain packaging for all tobacco and nicotine-containing products, including e-cigarettes. It also proposes a ban on the sale of single cigarettes, prohibits vending machines and point-of-sale advertising, and introduces further restrictions on smoking in public places.
“We therefore demand that parliament halt the bill and suspend its processing at portfolio committee level, and conduct a full employment and socioeconomic impact assessment,” said Vavi. Parliament needed to balance health objectives with jobs and development.
The BAT Heidelberg factory accounts for a significant total production for both domestic consumption and export into the wider Southern African region. The group employs at least 1,500 people in South Africa.
BAT’s 2023 results were negatively affected by an impairment of goodwill regarding South Africa of £291m due to the continued “negative effect of illicit trade”.
The group also called for the “urgent” introduction of a minimum retail price of R37 per pack, saying it should be illegal to sell a box of 20 cigarettes below the threshold, which it said is “economically viable”.
BAT has acknowledged the “recent” moves by Sars to clamp down on illegal cigarettes.
During Saftu’s meeting with the BAT leadership on Wednesday, Vavi said the company told the union federation it wanted to increase volumes of what it sells to remain profitable.
“They said they are unable to do so when competing with illegal trade. They said they would not leave if they get a commitment that illegal trade will stop.”
Correction: February 6 2026
This article’s original headline incorrectly implied that BAT is exiting the country. It has been corrected.
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