Montana Renewables Receives $1.44 Billion Conditional Commitment from DOE for Renewable Fuels and Biomass Energy Facility

October 30, 2024

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(Montana Renewables/ PR Newswire) Montana Renewables to expand Sustainable Aviation Fuel capacity by 300 million gallons per year -- Calumet, Inc. (NASDAQ: CLMT) ("Calumet," "we," "our" or "us") announced today that the U.S. Department of Energy ("DOE") Loan Programs Office ("LPO") has awarded a conditional commitment for a loan guarantee of up to $1.44 billion to fund the construction and expansion of a renewable fuels facility owned by Montana Renewables, LLC ("Montana Renewables" or "MRL"). Montana Renewables is an unrestricted subsidiary of Calumet.

The expansion would position Montana Renewables as one of the largest Sustainable Aviation Fuel ("SAF") producers globally with production capacity of approximately 300 million gallons of SAF and 330 million gallons of combined SAF and renewable diesel ("RD").

"We would like to thank the DOE LPO team for its dedication and partnership during this process," said Bruce Fleming, CEO of Montana Renewables. "Furthermore, our commitment to expanding SAF supply benefits the local community, the State of Montana, and the Pacific Northwest economic region. We are grateful for the steadfast support received from Great Falls, Cascade County, the State of Montana and Congressional officials and authorities."

MRL expects to execute a sequence of discrete individual projects including: a second renewable fuels reactor (allowing approximately half of the 300 million gallon SAF capability to be online by 2026); debottlenecking of the existing renewable fuels and feedstock pretreatment units; installation of SAF blending and logistics assets; increased renewable hydrogen production; addition of cogeneration for renewable electricity and steam; on-site water treatment and recycling capabilities; and other site enhancements.

"Our MaxSAF™ planned expansion is fully aligned with strategic national interest in low-emission sustainable alternatives," Fleming continued. "The expansion will directly replace fossil jet and diesel; reduce MRL's carbon footprint by producing more renewable hydrogen and electricity; and contribute to regional economic development."

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, at its peak, 450 construction jobs and up to 40 operations jobs.

Conditional Commitment Framework

The Conditional Commitment contemplates a loan guarantee structured in two tranches. The first tranche of approximately $778 million is expected to close in the fourth quarter of this year, and the balance of the loan guarantee is to be disbursed through a delayed draw construction facility from the beginning of construction in 2025 through the anticipated completion of the MaxSAF™ project in 2028.

If finalized, the loan will have a 15-year tenor and an annual interest rate at the U.S. Treasury rate plus 3/8% when issued (currently approximately 4 3/8%). Servicing of principal and interest will be deferred until MaxSAF™ is commissioned.

A $150 million equity investment will be made at the initial closing. Retained earnings from MRL will supplement DOE funds to maintain a 55/45 debt to equity ratio during the MaxSAF™ construction sequence.

While this conditional commitment represents a significant milestone and demonstrates DOE's intent to finance the project, certain technical, legal, environmental and financial conditions, including negotiation of definitive financing documents, must be satisfied before funding of the loan guarantee.

"Through our collaboration with the U.S. Department of Energy, we are thrilled to continue forward on the leading edge of our nation's Sustainable Aviation Fuel transition," said Calumet's CEO Todd Borgmann. "This investment will allow us to leverage our first-mover advantage and unique renewable hydrogen and pretreatment technologies to transform Montana Renewables into a world scale SAF producer. Through this conditional commitment, the U.S. is leading the world in renewable aviation, the hardest to abate sector in transportation, while demonstrating our country's innovation and technical leadership. Innovation is at the heart of what we do at Calumet and we are honored that Montana Renewables can help solidify our nation's position as a global leader in the one of energy's fastest growing niches."

About SAF
Sustainable Aviation Fuel (SAF) is a combination of synthetic paraffinic kerosene (SPK) and conventional jet fuel meeting ASTM D7566 and ASTM D1655 specifications. Designed to reduce the aviation industry's carbon footprint, SAF is drop-in compatible with existing aviation fueling infrastructure and aircraft engine technology. SAF volumes in this press release refer to 100% renewable SPK.

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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Montana Renewables receives $1.44 billion conditional commitment from DOE for renewable fuels and biomass energy facility (SAF Magazine)
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Montana Renewables to add 150 MMgy of SAF capacity by 2026 (SAF Magazine)

Excerpt from Biobased Diesel Daily: The Great Falls facility is conducting a planned turnaround in November to change catalyst.

This timing allows completion prior to the winter season and was planned to coincide with a period of margin uncertainty as the blenders tax credit is expected to change to the 45Z clean fuel production tax credit.

Regarding the $1.44 billion conditional commitment for a loan gaurantee from the U.S. DOE to fund its MaxSAF™ expansion project, which would boost SAF production to 300 million gallons per year, the company said it expects to executive a sequence of discrete individual projects, including:

A second renewable fuels reactor, allowing approximately half of the 300-million-gallon SAF capability to be online by 2026.
Debottlenecking of the existing renewable fuels and feedstock pretreatment units.
Installation of SAF blending and logistics assets.
Increased renewable hydrogen production.
Addition of cogeneration for renewable electricity and steam.
On-site water treatment and recycling capabilities.
And other site enhancements. READ MORE