Montana Renewables Announces Closing of $1.44 Billion DOE Loan Facility for Renewable Fuels and Biomass Energy Facility

January 15, 2025

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(Calumet/PR Newswire) Initial loan proceeds of $782 million expected to be funded this month and balance of proceeds funded through planned construction period; DOE loan guarantee facilitates expansion of Sustainable Aviation Fuel capacity to 300 million gallons per year -- Calumet, Inc. (NASDAQ: CLMT) ("Calumet," "we," "our" or "us") announced today (January 10, 2025) the closing of a $1.44 billion guaranteed loan facility with the U.S. Department of Energy ("DOE") Loan Programs Office ("LPO"). The loan will fund the construction and expansion of the renewable fuels facility owned by Montana Renewables, LLC ("Montana Renewables" or "MRL"), 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 ("RD"). 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. This is possible through the strong support and partnership of DOE and follows over two years of detailed due diligence," said Bruce Fleming, CEO of Montana Renewables. "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."

"This investment is a pivotal catalyst for Calumet," said Todd Borgmann, CEO of 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."

Loan Guarantee Structure

The loan guarantee is structured to release a first tranche of approximately $782 million to fund eligible expenses previously incurred by MRL. 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 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 U.S. Treasury rate plus 3/8%. Servicing of principal and interest will be deferred until MaxSAF™ is commissioned.

Regional Development

An economic impact study1 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 comprised of public and private partners in Montana and the Pacific Northwest.

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

About Montana Renewables
Montana Renewables is a leading renewable fuel company located in Great Falls, Montana. MRL produces Sustainable Aviation Fuel, Renewable Diesel, Renewable Hydrogen and Renewable Naphtha. As the largest SAF producer in North America (2024), MRL is dedicated to meeting the increasing demand for sustainable fuels and to supporting a greener future. As a Great Falls business leader, MRL offers high-paying jobs and career opportunities while supporting the local economy and contributing to the community's overall well-being. Pacific Northwest farm and ranch operations ultimately provide MRL with sustainable, renewable, low-carbon feedstocks and agricultural byproducts including tallow, distillers corn oil, canola oil, used cooking oil and camelina oil. These feedstocks are converted to renewable transportation fuels which have lower emissions compared to conventional fossil fuels. MRL is an unrestricted subsidiary of Calumet, Inc.

About Calumet
Calumet, Inc. (NASDAQ: CLMT) manufactures, formulates, and markets a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets. Calumet is headquartered in Indianapolis, Indiana and operates twelve facilities throughout North America. READ MORE

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DOE Announces $1.67 Billion to Montana Renewables to Significantly Expand US Sustainable Aviation Fuel Production (U.S. Department of Energy)

Excerpt from U.S. Department of Energy: As part of the Biden-Harris administration’s Investing in America agenda, the Department of Energy’s (DOE) Loan Programs Office (LPO) announced today the closing of a $1.67 billion ($1.44 billion of principal and $233 million of capitalized interest) to Montana Renewables, LLC (Montana Renewables, or MRL). The loan guarantee will help finance the expansion of a renewable fuels facility in Great Falls, Montana to produce sustainable aviation fuel (SAF), renewable diesel, and renewable naphtha. Today’s announcement underscores President Biden and Vice President Harris’ efforts to build a thriving bioeconomy that benefits all Americans while also helping advance sustainable fuels to cut harmful emissions and deliver healthier communities across the nation.

The decarbonization of the U.S. transportation and industrial sectors depends on a significant increase in the production of biofuels—which are expected to deliver new economic opportunities for agricultural and rural communities across the nation while tackling the climate crisis. This project will utilize vegetable oils, fats, and greases to produce sustainable fuels.

The MRL facility has been in operation since late 2022, currently producing about 140 million gallons per year of biofuels, most of which is renewable diesel. The loan guarantee will fund facility expansion to produce about 315 million gallons per year of biofuels, most of which will be SAF. Once the facility reaches full capacity, Montana Renewables will be a leading global SAF producer, expected to produce about half of all North American SAF and about 12% of all global SAF through 2030. MRL will produce fuels with significantly lower greenhouse gas emissions, on a life cycle basis, when compared to the production and consumption of conventional co-products, including jet fuel.

This project supports the Biden-Harris Administration’s SAF Grand Challenge goal of increasing U.S. production of SAF to 3 billion gallons per year by 2030 and 35 billion gallons per year by 2050. As the aviation sector aims to meet its decarbonization goals, SAF will become increasingly vital. SAF is one of the only viable near-term options to decarbonize the airline industry, which is responsible for 11% of U.S. transportation emissions or 3.3% of total U.S. emissions.

LPO borrowers are required to develop and ultimately implement a comprehensive Community Benefits Plan (CBP). CBPs ensure borrowers meaningfully engage with community and labor groups to create good-paying jobs and improve the well-being of the local community and workers. This project is expected to create, at its peak, 450 construction jobs and up to 40 new operations jobs. A majority of the workers currently employed at the MRL facility are union workers covered by a collective bargaining agreement with the United States Steelworkers Local 0491. For more than a decade, Calumet (the parent company of MRL) has funded various Great Falls educational initiatives in science, technology, engineering, arts, and mathematics at local schools and colleges.

President Biden and Vice President Harris’ Justice40 Initiative, established by Executive Order 14008, sets a goal that 40% of the overall benefits of certain federal investments in climate, clean energy, and other areas flow to disadvantaged communities that are marginalized by underinvestment and overburdened by pollution. Many of the communities surrounding Great Falls are disadvantaged communities, as identified by the Climate and Economic Justice Screening Tool, due to high energy burdens and housing costs. MRL has made a concerted effort to hire a majority of its non-salaried workforce from the local community.

To learn more about how biofuels can help decarbonize hard-to-electrify sectors such as aviation, read about the Bioenergy Technology Office’s Billion-Ton Report here.

LPO has been considering Montana Renewables’ application since September 2022.

The loan guarantee is offered through LPO’s Energy Infrastructure Reinvestment (EIR) program under Title 17 Clean Energy Financing Section 1706. EIR can finance projects that retool, repower, repurpose, or replace energy infrastructure that has ceased operations or enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or greenhouse gas emissions. This project will convert a portion of an oil refinery to produce renewable fuels. The project will also reduce the carbon intensity of steam production and consumption in the neighboring oil refinery.

Across all LPO’s programs, DOE has attracted 182 applications for projects across the country totaling over $278.9 billion in requested loans and loan guarantees, as of December 2024. For more information about Montana Renewables, read the conditional commitment blog post and visit LPO’s portfolio project page. READ MORE