Montana Renewables LLC (MRL) has closed the $50 million of project financing from Stonebriar Commercial Finance LLC related to construction of the renewable hydrogen plant for Calumet's renewable diesel business in Great Falls, Montana, Calumet Specialty Products Partners LP said on Jan. 4.

Once complete, the renewable hydrogen plant will allow increased production of renewable diesel and further reduce the carbon intensity of products from MRL. The renewable hydrogen plant has an expected operational startup in the fourth quarter of 2022.

In November 2021, Calumet established MRL as an unrestricted pure-play renewables subsidiary and holds 100% equity in the company. The deal saw MRL acquire Calumet's existing high-metallurgy hydrocracker and related assets in Great Falls, Montana.

According to Calumet, MRL's existing hydrocracker metallurgy of 317L stainless steel is well-suited for renewable feedstock processing. Its unique renewable hydrogen project further lowers carbon intensity and maximizes renewable diesel production and a new state of the art feedstock pre-treater combined with proximity to temperate oilseeds and low-carbon product markets will provide MRL with significant sourcing and logistics advantages.

Last year, MRL secured a three-year $300 million convertible debt investment from funds managed by Oaktree Capital Management LP. It also closed on a $145 million preferred equity investment by Calumet, comprised of $44 million for Renewable Diesel project capex and $101 million cash.

The addition of MRL adds two fully independent business lines to Calumet’s Montana operations: renewables through MRL and conventional Canadian crude refining through Calumet Montana Refining LLC.

These two deals brought Calumet net cash proceeds of approximately $199 million. The company was able to begin reducing its outstanding debt by issuing a notice of redemption in November for the $80 million outstanding principal amount of its 7.625% senior notes due 2022.

"We have a clear vision for Calumet, and we have been implementing it through the re-segmentation of our businesses at the beginning of the year and now by standing up arguably the best renewable diesel conversion project in North America,” said Calumet CEO Steve Mawer. “2021 has been a year of tremendous value creation for our unitholders and we are very pleased to finish the year by forming this partnership at Montana Renewables with Oaktree. These transactions advance Calumet's vision for MRL as a standalone, high-growth, pure-play renewable fuels business."

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