Calumet Inc. on Feb. 18 announced that its subsidiary Montana Renewables LLC has received the first drawdown of approximately $782 million from its $1.44 billion U.S. Department of Energy loan guarantee. The loan will fund the expansion of sustainable aviation fuel (SAF) production capacity. 

"DOE's mission includes technology and domestic energy security. MRL delivers both," said Bruce Fleming, CEO Montana Renewables. "Over the past three years DOE's Loan Program Office conducted a rigorous due diligence process supported by experts in technology, markets, law, underwriting, and risk, and MRL qualified on the merits. The incoming administration took time to verify this and we appreciate the office's thoroughness. Today we are pleased to continue leading Montana's largest biofuels investment and look forward to our continued collaboration with the LPO on the success of this project."

"Montana Renewables has been at the cutting edge of a rapidly developing biofuels market since its inception," said Todd Borgmann, CEO of Calumet. "MRL proved itself as an early mover in large scale SAF production, and now we are proud to be the first project to receive the support of our new Administration.  I thank the entire DOE team for its continued commitment to supporting this practical and rapidly growing form of aviation fuel and for taking the time to ensure our nation's investments are prudent ones. The expansion of Montana Renewables into one of the world's largest SAF producers is an exceptional opportunity for regional agriculture, Montana business development, our employees and our shareholders."

Montana Renewables has been working to expand SAF production through what it calls its MaxSAF initiative for several years. The initiative aims to boost SAF production at the company’s biorefinery from the current capacity of 50 MMgy to 150 MMgy by 2026 and 300 MMgy during the following two years. In addition to SAF, the facility is expected to continue to produce renewable diesel and renewable naphtha. Renewable diesel capacity is expected to be approximately 30 MMgy at the completion of the MaxSAF initiative, compared to approximately 138 MMgy currently. 

The company completed the extensive DOE loan guarantee application process last year, with the DOE issuing a conditional commitment for the loan guarantee in October 2024. Calumet closed on the $1.44 billion loan guarantee on Jan. 10. The first tranche of approximately $782 million was scheduled to be disbursed on Jan. 28. 

Calumet on Jan. 28 issued a statement that the first tranche of funding was undergoing a “tactical delay to confirm alignment with White House priorities.” The company said it had been informed “the delay should be days or weeks.” 

In a document submitted to the U.S. Security and Exchange Commission on Feb. 12, Calumet said it has been informed by the DOE’s Loan Program Office that the review has been successfully completed. The funding process has resumed, with the first tranche of approximately $782 million expected to be completed during the week of Feb. 17. Calumet on Feb. 18 confirmed it has received the first tranche of funding. 

The DOE loan guarantee is structured in two tranches. The first tranche of approximately $782 million will fund eligible expenses previously incurred by Montana Renewables. 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 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 precedent. During construction, retained earnings from Montana Renewables 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.

An economic impact study produced by the University of Montana Bureau of Business and Economic Research predicts the economic impact of the project at the Great Falls site is expected to support a population of 4,400 Montanans. Montana Renewables said it expects MaxSAF initiative to catalyze regional development, particularly for feedstock production. The expansion project is also expected to create 450 temporary construction jobs and 40 permanent operations jobs.