Calumet, Inc. announced that Montana Renewables, LLC, an unrestricted subsidiary of Calumet, has received its first drawdown of approximately $782 million from its $1.44-billion guaranteed loan facility with the US Department of Energy (DOE) Loan Programs Office (LPO). The loan funds the construction and expansion of the renewable fuels facility owned by Montana Renewables.

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 (RD).

The planned expansion includes several key modular components, which will provide the ability to increase capacity and reduce costs. The most important component is a second renewable fuels reactor, which will allow approximately half of the 300-million-gallon SAF capability to be online by 2026.

The loan guarantee is structured in two tranches, with the first tranche of approximately $782 million released to fund eligible expenses previously incurred by MRL. Simultaneous with the first tranche funding, Calumet made an additional $150-million equity investment with cash on hand. The balance of the guaranteed loan proceeds of up to approximately $658 million is expected to be disbursed through a delayed draw construction facility, and MRL 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 precedent. During construction, retained earnings from MRL are expected to supplement DOE funds to maintain debt at 55% of capitalization during the MaxSAF construction sequence. The loan has a 15-year tenor and an annual interest rate at the US Treasury rate plus 3/8%. 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 (BBER) 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.

MRL 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, MRL will create a large-scale, end-to-end SAF industry comprising public and private partners in Montana and the Pacific Northwest.