March 19, 2008 / 12:35 AM / in 10 years

BHP Billiton mines Olympics for goodwill in China

BEIJING (Reuters) - Global mining giant BHP Billiton is not your average Olympic sponsor. It produces metal ore, not soft drinks, cameras, credit cards or sports shoes -- products typically associated with Olympics sponsorship deals.

<p>The prototype medals for the Beijing 2008 Olympic Games are displayed during a material handover ceremony in Shanghai in this January 15, 2008 file photo. Raw materials like gold and bronze were handed over by BHP Billiton to a mint factory which will be manufacturing medals for the upcoming Olympic Games. REUTERS/Nir Elias/Files</p>

China’s voracious appetite for metals, coal and oil makes it the biggest market for BHP, the world’s second-largest miner. That has spurred the Australian-based company to use an unconventional sponsorship deal to capture some of the Olympics glow.

BHP will provide the gold, silver and bronze medals for the 2008 Olympics Games in Beijing this August, as well as for the Paralympics that follow.

In return for providing the medals and an unspecified amount of cash, BHP is an official sponsor of the 2008 Olympic Games and is able to use the Olympics logo to promote its business.

But rather than promote its brand to Olympic spectators, BHP is using the deal to appeal to a close circle of clients and employees.

“Most sponsorships focus on media buys and advertising. We’ve done almost none,” said Maria McCarthy, who heads up the company’s Olympic sponsorship team.

“Instead, we are focusing on community leveraging, stakeholder leveraging that involves governments and customers, and our staff.”

There are no BHP Billiton TV ads or billboards for the 2008 Olympics games in Beijing.

Instead, from mountain mining towns in Africa, to open pits in the Western Australian desert, to China’s gritty industrial cities, BHP is using its sponsorship rights to organize community events that bring Olympic athletes to its staff and customers, and their families.

“In Africa, when we invite our staff, they bring their villages - 4,000 people might show up,” McCarthy said.

“The take-up’s been huge. A lot of our assets are really remote, and this type of planned attention hasn’t happened before.”

BHP hopes that some of the glow transfers to the company, an amalgamation of mining firms with operations in 25 countries that don’t always have too much in common, she said.

And there’s a practical basis too.

“The interaction with customers is very different. Normally, you’re sitting across the table, there’s a big dinner, it’s the same dynamic every time,” said Clinton Dines, BHP’s China president.

“This breaks the dynamic and you get a new interaction with the customer. They bring lots of people and everyone has a great time.”

BHP hopes this will translate, somewhere down the road, into dollars. Although China accounts for 20 percent of BHP’s sales, the company has a very limited presence in the mainland because it does not operate mines there.

Since it has no assets to speak of in China and only about 100 employees, BHP has used the community events to interact with local governments and its Chinese customers, who refine the ores mined by BHP.

“They are more than B to B, they are B to limited B, so they had to think through ‘how does it relate to us? we are not a mass marketer,”’ said Christopher Renner, president of sporting consultant Helios Partners in Beijing, which advises

BHP.

China’s double-digit annual growth has caused prices of copper, iron ore, coal and other metals to soar this decade.

With metals prices at historic highs, BHP has no need to prompt the market to buy its product.

“Now, we have no need to advertise our product. The demand is greater than what we can get out of the ground,” McCarthy said.

SOWING GOODWILL

BHP has sometimes had an acrimonious relationship with its top customer, especially after 2005, when miners sharply raised the price they charge for iron ore and awakened nationalist indignation from Chinese steelmakers and media.

This year, it is trying to take over smaller rival Rio Tinto, in a merger that Chinese fear will concentrate too much of the raw materials for steel, aluminum and copper in too few hands.

BHP took a quieter, less aggressive role during this year’s round of iron ore negotiations, and sought to reassure its Chinese customers that the merger would result in greater efficiency and lower prices.

Past hostility in the Chinese press “assisted in our decision to get involved in the Beijing games,” McCarthy said.

Australia-based BHP won’t comment on how much it paid for its Olympic sponsorship deal or whether it intends to continue sponsoring the Olympics in future. Its only prior Olympics involvement was at the 2000 Olympic Games in Sydney.

But the sponsorship category it pioneered, diversified minerals and medals sponsor, will live on in the hands of rival miner Teck Cominco during the Vancouver Winter Olympics in 2010.

Editing by Megan Goldin

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