Montana Renewables closes on $1.44 billion DOE loan facility for SAF expansion, biomass-energy complex

Calumet Inc. announced Jan. 10 the closing of a $1.44 billion guaranteed-loan facility with the U.S. DOE Loan Programs Office.

The loan will fund the construction and expansion of the renewable fuels facility owned by Montana Renewables LLC, an unrestricted subsidiary of Calumet.

The expansion positions Montana Renewables as one of the largest sustainable aviation fuel (SAF) producers globally, enabling an increase in annual production capacity to approximately 300 million gallons of SAF and 330 million gallons of combined SAF and renewable diesel.

The planned expansion includes several key components: a second renewable fuels reactor (allowing approximately half of the 300-million-gallon SAF capability to be online by 2026), debottlenecking of existing units, installation of SAF blending and logistics assets, increased renewable hydrogen production, cogeneration for renewable electricity and steam, and on-site water treatment and recycling capabilities.

“This is essentially the largest agricultural investment in Montana history and will double our purchases of seed oils and tallow from approximately 1.5 billion pounds per year today to 3 billion pounds per year post expansion,” said Bruce Fleming, CEO of Montana Renewables. “This is possible through the strong support and partnership of DOE and follows over two years of detailed due diligence. Our MaxSAF expansion drives regional economic development by creating jobs, supporting the broader agricultural industry, and positioning the state of Montana as a global leader in renewable fuels in a practical and highly economic way with technology that we have developed and derisked here in the United States.”

Todd Borgmann, CEO of Calumet, added, “This investment is a pivotal catalyst for Calumet. Following our conversion to a C-Corporation, we emphasized the importance of the DOE loan as the next major step in Calumet’s vision, and achieving that milestone is a tremendous accomplishment. As Montana Renewables grows from a first mover and innovator in SAF to become one of the largest independent producers in the world, this business continues to competitively position itself for success, which is a critical piece of Calumet’s strategy to deliver ongoing shareholder value.”

The loan guarantee is structured to release a first tranche of approximately $782 million to fund eligible expenses previously incurred by Montana Renewables.

Simultaneous with the expected first tranche funding, Calumet expects to make an additional $150 million equity investment with funds that it currently holds.

The balance of the guaranteed-loan proceeds is held in a delayed-draw construction facility, and Montana Renewables expects this second tranche to be disbursed during construction beginning in 2025 through the anticipated completion of the MaxSAF project in 2028.

Disbursements under the guaranteed-loan facility are subject to the satisfaction of certain commercial, technical and legal conditions.

During construction, retained earnings from Montana Renewables are expected to supplement DOE funds to maintain debt at 55 percent of capitalization during the MaxSAF™ construction sequence.

The loan has a 15-year tenor and an annual interest rate at the U.S. treasury rate plus three-eighths of a percent.

Servicing of principal and interest will be deferred until MaxSAF™ is commissioned.

An economic impact study produced by the University of Montana Bureau of Business and Economic Research measured the substantial benefit to Montana in the form of jobs, income, government revenues, economic output and population.

For example, by 2028, the economic footprint of the Great Falls site is expected to support a population of 4,400 Montanans, consisting primarily of working-aged families and their children.

Montana Renewables expects the expansion to catalyze additional regional development, particularly for renewable feedstocks sourced from farms and ranches.

By driving local infrastructure development in transportation, agricultural and energy-related businesses similar to the Minnesota SAF Hub, Montana Renewables will create a large-scale, end-to-end SAF industry comprised of public and private partners in Montana and the Pacific Northwest. 

The expansion is expected to create 450 construction jobs and up to 40 operations jobs.