The United States on Monday gave American customers of Russia's biggest aluminum producer more time to comply with sanctions, and said it would consider lifting them if United Company Rusal's major shareholder, Russian tycoon Oleg Deripaska, ceded control of the company.
Aluminum prices on the London Metal Exchange tumbled 8.7 percent on the U.S. Treasury Department announcement, which gives Rusal longer to sell off large quantities of aluminum it had been stockpiling in the wake of sanctions.
Last week, aluminum prices rallied to their highest in years after Washington, in response to what it called "malign activities" by Russia, imposed the sanctions that will in effect choke off access for Deripaska's businesses to the international financial system.
Treasury gave Americans until Oct. 23 instead of June 5 to wind down business with Rusal. It said it would not impose secondary sanctions on non-U.S. entities engaged with Rusal or its subsidiaries.
Shares in Rusal, one of the world's largest aluminum companies, jumped 17.7 percent on the Moscow Exchange. Earlier, Rusal had ended Hong Kong trading down 8.4 percent. Shares of its U.S. rival Alcoa slid 13.5 percent on the New York stock exchange.
"Rusal has felt the impact of U.S. sanctions because of its entanglement with Oleg Deripaska, but the U.S. government is not targeting the hardworking people who depend on Rusal and its subsidiaries," U.S. Treasury Secretary Steve Mnuchin said.
Workers at one of Russia's biggest aluminium smelters say their Siberian town is doomed unless Moscow mitigates U.S. sanctions against Rusal, a predicament mirrored across the company's sprawling operations.
Deripaska owns a 48 percent stake in Rusal "and controls the company via his shareholder agreement with other owners," said Oleg Petropavlovsky, a senior analyst at BCS Global Markets.
"It is not clear whether potential cancellation of this shareholder agreement would be enough" to satisfy U.S. officials, he said.
Rusal declined to comment on the Treasury Department announcement. The Kremlin and Deripaska did not immediately respond to requests for comment.