The US Securities and Exchange Commission is looking into whether Freeport-McMoRan failed to disclose threats a severe earthquake could pose to its new $3.7-billion copper smelter complex in Indonesia, according to people familiar with the matter.

SEC officials began reviewing whether the firm should have made certain disclosures to investors after a senior engineer who worked as a contractor for Freeport filed a whistleblower complaint with the regulator, said the people, who asked not to be identified discussing the confidential matter. The unidentified former contractor alleged the complex could collapse into the sea during a significant tremor, according to a copy of the document reviewed by Bloomberg News.

Freeport allegedly ignored the advice of experts and relied on engineering designs that didn’t meet Indonesia’s code for earthquake-resistant buildings, according to the complaint, which was filed in 2022. The document alleges that a collapse of the facility could threaten human lives and the environment, cause turmoil in metals markets, and hurt Freeport’s business and its share price.

The SEC hasn’t accused Freeport of wrongdoing. Its probes can end without a case being brought and can take months or even years to complete. Firms or people the agency alleges broke US securities rules can face fines or other civil penalties. The regulator requires public companies to disclose risks an average person would deem material to an investment decision.

A spokesperson for the SEC declined to comment.

Freeport rejects the whistleblower complaint’s claims. In a statement, the company said the smelter project underwent “multiple subject matter expert reviews” confirming that the engineering design and construction were “fully compliant with all applicable Indonesian building codes.”

“Safety remains Freeport’s number one priority,” said Linda Hayes, a spokesperson for Freeport. “It is a matter on which we do not compromise.”

Hayes said the company discloses all material information about its business, including about any SEC inquiries, in its public filings.

Arizona-based Freeport derives a significant share of its revenue from Indonesia. It built the smelter in an industrial hub on the East Java coast to maintain access to one of the world’s largest copper reserves. The complex takes up 272 acres in an area Indonesia designated as a special economic zone in 2021.

Engineering experts recommended that the ground should be strengthened more than originally planned to support the complex, which sits on reclaimed coastal land in a “high hazard zone,” according to the complaint.

Indonesia’s government holds a majority stake in the Freeport subsidiary that operates the Manyar complex. The government fined Freeport tens of millions of dollars over construction delays and linked progress on completion of the project to reductions in export duties.

Representatives for the Indonesian government didn’t respond to requests for comment. Freeport didn’t respond to questions about its interaction with Indonesian officials.

Shareholders in Freeport include some of the biggest money managers, hedge funds and US public pension plans. They have helped push the company’s shares up more than fourfold in the past five years amid bets that demand for copper will keep rising as part of the transition to cleaner energy and electric vehicles.

Freeport hired the engineer in 2019 to evaluate designs for company projects around the world. During a visit to the smelter site in August of that year, according to the complaint, the person found workers were strengthening the ground based on designs by Ontario-based engineering firm Golder Associates.

The person told the SEC that the designs that were used were flawed. According to the complaint, the person asked Youssef Hashash, an earthquake engineering expert at the University of Illinois Urbana-Champaign, to review the designs because he had developed software Golder used for its seismic analysis.

Hashash found Golder had misused his program, according to the complaint. He wrote in a summary of his findings that it was “imprudent to design and build a facility on soils that are known to liquefy,” which could threaten structures, according to an excerpt included in the complaint. Hashash declined to comment for this article.

Two senior engineers on the project pushed for a separate opinion from Robb Moss, a California Polytechnic State University engineering professor and former Golder employee, according to the complaint. Moss delivered an “inconclusive” report, according to the complaint.

Moss declined to comment. WSP, which acquired Golder in 2021, said it wasn’t “in a position to comment on client information.”

Another analysis by an Indonesian engineering firm in May 2020 that was ordered by Freeport echoed the views of the contractor and Hashash, according to the complaint.

The contractor later received an internal report that showed Golder had reviewed its original analysis and concluded it was “valid” and “can be relied upon for project design,” according to the complaint.