Montana Renewables closes $1.4bn DOE facility
A shipment of 7,000 gallons of Sustainable Aviation Fuel was delivered to Dearborn, Michigan from Montana Renewables, LLC. The SAF will be transferred to Detroit Metropolitan Airport via pipeline to fuel Delta flights.
Calumet announced that it has successfully closed the $1.44bn guaranteed loan facility with the US Department of Energy (DOE) Loan Programs Office to fund the construction and expansion of Montana Renewables’ fuels facility.
The expansion will make Montana Renewables the leading sustainable aviation fuel (SAF) producer in the world. Once completed, the site will boast an annual production capacity of 300m gallons of SAF and another 30m gallons of HVO capacity.
The company said that it will install a second renewable fuels reactor (allowing approximately half of the 300m 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 1.5bn pounds per year today to 3bn 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.
The loan guarantee is structured to release a first tranche of approximately $782m to fund eligible expenses previously incurred by Montana Renewables.
Simultaneous with the expected first tranche funding, Calumet expects to make an additional $150m 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.
According to the details, Montana Renewables is expected to supplement funds received by the DOE in order to maintain debt at 55% of capitalisation during the construction phase.
The DOE loan has a 15-year tenor and an annual interest rate at the US Treasury rate plus 3/8% – significantly lower than the commercial funding rates. Servicing of principal and interest will be deferred until MaxSAF is commissioned.
Montana Renewables is a subsidiary of Calumet.
To note, Montana Renewables announced October last year that it had received conditional commitment of $1.44bn guarantee to expand their existing facility in Great Falls, Montana, into a SAF production centre. The funding will help increase Montana’s biofuel production from 140m to 315m gallons per year.