Sabey nixes buy-sell agreement with Butte-Silver Bow, but still hunting for data center site

Sabey Data Centers terminated the company’s buy-sell agreement with Butte-Silver Bow County on May 13 but hasn’t forsaken the region as a potential site to build a data center.

“Sabey is still looking in southwest Montana, including Silver Bow,” said J.P. Gallagher, chief executive of Butte-Silver Bow County.

“They're looking in Deer Lodge County and other places in southwest Montana,” he said.

Sabey had a buy-sell agreement to acquire about 606 acres in the Montana Connections Business Development Park west of Butte. The company’s due diligence discovered that REC Silicon, an existing tenant in the park, had the right of first refusal to some 627 acres, including land that would have housed the sprawling data center.

A right of first refusal stipulation in a real estate property agreement grants its holder the first opportunity to make an offer on a property and buy it if it goes on the market, according to the National Association of Realtors.

When REC Silicon announced last month its intentions to exercise that right, dating back to 1996, the deal with Sabey appeared to be knee-capped. That potential outcome provided relief to some foes of the project, who have expressed concerns about the data center’s consumption of water and electricity. But it stirred disappointment among supporters who felt the data center would boost work during construction, yield tax revenues and permanent employment for some.

REC Silicon has a large facility in the business park, producing silicon gas and other projects. Its right of first refusal agreement essentially gives it the first opportunity to buy the land on the same terms as Sabey was slated to receive.

The right of first refusal notice identified 627.8 acres at a price of $2,000 per acre, for a total of $1,255,606 that REC Silicon would pay Butte-Silver Bow County.

Gallagher said Karen Byrnes, community development director for Butte-Silver Bow, is working with REC Silicon on the purchase within the right of first refusal property.

“And so we’ll be doing negotiations back and forth with that,” he said.

The Butte Council of Commissioners had agreed more than a year ago to sell 606 acres to Sabey Data Centers. In early February, commissioners approved extending until Aug. 11 Sabey’s deadline for closing on the land deal.

Another company could be in the mix, according to previous reporting by The Montana Standard. Cenate is a battery materials company based in Norway that could readily secure raw materials from REC Silicon if Cenate moved to the business park.

Kayla Lappin, an economic development coordinator for Butte-Silver Bow, said last month that Cenate’s business reliance on REC Silicon increases the importance of the companies being in proximity.

Last month, Hanwha Solutions, headquartered in South Korea, announced it has become the largest shareholder of REC Silicon. It’s not yet clear what that transaction might mean for the facility in Butte-Silver Bow County.

Neither Sabey Data Centers nor REC Silicon responded Tuesday to inquiries from The Montana Standard.