WASHINGTON/MOSCOW (Reuters) - 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 Plc’s major shareholder, Russian tycoon Oleg Deripaska, ceded control of the company.

FILE PHOTO: Aluminium ingots are seen stored at the foundry shop of the Rusal Krasnoyarsk aluminium smelter in Krasnoyarsk, Siberia, July 27, 2016. REUTERS/Ilya Naymushin//File Photo

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 Corp 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 Steven Mnuchin said.

Workers at one of Russia’s biggest aluminum 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.

NO LONGER ‘RADIOACTIVE’

European leaders have worked to persuade U.S. President Donald Trump to ease sanctions on Russia, with the president of France poised to visit the White House this week.

Mnuchin said “impact on our partners and allies” factored into the reprieve. French sources said initial feedback had been “constructive.”

Rusal now has more time to sell off its supply. Even if sanctions are not ultimately lifted, buyers also have more time to seek other suppliers.

Last week, aluminum rallied to its highest since mid-2011 on fears the global market could face shortages as a result of the U.S. sanctions. It remains up more than 16 percent this month.

Wood Mackenzie analysts said Treasury’s announcement provides “much-needed breathing space” for the aluminum market, adding “We expect near-term correction and volatility” in prices.

Edward Meir, an analyst at INTL FCStone, said there is potential for Rusal to survive and that “the 5 mln (million) tons of Rusal production that a week ago was arguably radioactive, will no longer be so.”