KAISER ALUMINUM & CHEMICAL CORP, 10-Q, 1997-08-01

KAISER ALUMINUM & CHEMICAL CORP
10-Q, 1997-08-01
PRIMARY PRODUCTION OF ALUMINUM

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997

Commission file number 1-3605

KAISER ALUMINUM & CHEMICAL CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 94-0928288
(State of incorporation) (I.R.S. Employer Identification
No.)

6177 SUNOL BOULEVARD, PLEASANTON, CALIFORNIA 94566-7769
(Address of principal executive offices) (Zip Code)

(510) 462-1122
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes x No
------- ------

At July 28, 1997, the registrant had 46,171,365 shares of Common Stock
outstanding.

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KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
--------------------

CONSOLIDATED BALANCE SHEETS
(In millions of dollars)
<TABLE>

<CAPTION>
June 30, December 31,
1997 1996
------------------------------
<S> <C> <C>
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents $ 17.4 $ 81.3
Receivables 294.7 255.6
Inventories 564.5 562.2
Prepaid expenses and other current assets 133.0 127.8
------------------------------
Total current assets 1,009.6 1,026.9

Investments in and advances to unconsolidated affiliates 166.5 168.4
Property, plant, and equipment - net 1,161.1 1,168.7
Deferred income taxes 278.2 263.3
Other assets 356.7 308.6
------------------------------

Total $ 2,972.1 $ 2,935.9
==============================

LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 148.1 $ 189.3
Accrued interest 37.6 35.6
Accrued salaries, wages, and related expenses 82.2 95.4
Accrued postretirement medical benefit obligation -
current portion 50.1 50.1
Other accrued liabilities 120.3 132.8
Payable to affiliates 103.4 96.9
Long-term debt - current portion 5.8 8.9
Note payable to parent 4.3 8.6
------------------------------
Total current liabilities 551.8 617.6

Long-term liabilities 500.5 458.1
Accrued postretirement medical benefit obligation 717.8 722.5
Long-term debt 999.6 953.0
Minority interests 92.9 92.5
Redeemable preference stock 27.0 27.5
Commitments and contingencies
Stockholders' equity:
Preference stock 1.6 1.7
Common stock 15.4 15.4
Additional capital 1,882.4 1,829.8
Accumulated deficit (184.3) (201.3)
Additional minimum pension liability (2.8) (2.8)
Less: Note receivable from parent (1,629.8) (1,578.1)
------------------------------
Total stockholders' equity 82.5 64.7
------------------------------

Total $ 2,972.1 $ 2,935.9
==============================

</TABLE>

The accompanying notes to interim consolidated financial statements are an
integral part of these statements.

KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)
(In millions of dollars)

<TABLE>

<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
1997 1996 1997 1996
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Net sales $ 597.1 $ 567.6 $ 1,144.5 $ 1,098.7
------------------------------ ------------------------------

Costs and expenses:
Cost of products sold 489.3 476.1 950.0 909.8
Depreciation 22.8 24.2 45.9 48.2
Selling, administrative, research and development, and
general 29.7 30.5 60.5 63.3
Restructuring of operations 19.7 19.7
------------------------------ ------------------------------
Total costs and expenses 561.5 530.8 1,076.1 1,021.3
------------------------------ ------------------------------

Operating income 35.6 36.8 68.4 77.4

Other income (expense):
Interest expense (28.2) (23.0) (55.9) (45.7)
Other - net (3.4) 1.2 (.8) .9
------------------------------ ------------------------------

Income before income taxes and minority interests 4.0 15.0 11.7 32.6

(Provision) benefit for income taxes 11.0 (5.6) 8.1 (12.2)

Minority interests (.4) (.9) .1
------------------------------ ------------------------------

Net income $ 14.6 $ 9.4 $ 18.9 $ 20.5
============================== ==============================

</TABLE>

The accompanying notes to interim consolidated financial statements are an
integral part of these statements.

KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
(In millions of dollars)<TABLE>

<CAPTION>
Six Months Ended
June 30,
------------------------------
1997 1996
------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 18.9 $ 20.5
Adjustments to reconcile net income to net cash used for
operating activities:
Depreciation 45.9 48.2
Restructuring of operations 19.7
Non-cash benefit for income taxes (12.5)
Amortization of excess investment over equity in
unconsolidated affiliates 5.8 5.8
Amortization of deferred financing costs and net
discount on long-term debt 3.0 2.7
Undistributed equity in (income) loss of unconsolidated
affiliates, net of distributions 12.0 (7.9)
Minority interests .9
(Increase) decrease in receivables (49.4) 30.1
Increase in inventories (5.5) (33.0)
Increase in prepaid expenses and other assets (15.7) (31.2)
Decrease in accounts payable (41.2) (21.5)
Increase in accrued interest 2.0 .1
Decrease in payable to affiliates and accrued liabilities (18.7) (20.0)
Decrease in accrued and deferred income taxes (6.1) (8.7)
Other (.5) 4.1
------------------------------
Net cash used for operating activities (41.4) (10.8)
------------------------------

Cash flows from investing activities:
Net proceeds from disposition of property and investments 22.1 1.2
Additions to property, plant, and equipment (68.8) (51.9)
Redemption fund for minority interests' preference stock (2.5) (1.3)
------------------------------
Net cash used for investing activities (49.2) (52.0)
------------------------------

Cash flows from financing activities:
Borrowings under revolving credit facility, net 30.0 67.3
Borrowings of long-term debt 19.0
Repayments of long-term debt (5.1) (5.6)
Increase in restricted cash, net (10.1)
Payments to parent (4.3) (4.3)
Incurrence of financing costs (.5)
Dividends paid (.3) (.5)
Redemption of minority interests' preference stock (2.0) (5.1)
------------------------------
Net cash provided by financing activities 26.7 51.8
------------------------------

Net decrease in cash and cash equivalents during the period (63.9) (11.0)
Cash and cash equivalents at beginning of period 81.3 21.7
------------------------------

Cash and cash equivalents at end of period $ 17.4 $ 10.7
==============================

Supplemental disclosure of cash flow information:
Interest paid, net of capitalized interest $ 50.9 $ 42.9
Income taxes paid 8.2 14.7
Tax allocation payments to Kaiser Aluminum Corporation .9 2.7
Tax allocation payments to MAXXAM Inc. 1.1

</TABLE>

The accompanying notes to interim consolidated financial statements are an
integral part of these statements.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In millions of dollars, except prices and per share amounts)

1. GENERAL

Kaiser Aluminum & Chemical Corporation (the "Company") is the
principal operating subsidiary of Kaiser Aluminum Corporation ("Kaiser").
Kaiser is a subsidiary of MAXXAM Inc. ("MAXXAM"). MAXXAM and one of its
wholly owned subsidiaries together own approximately 62% of Kaiser's Common
Stock, assuming the conversion of each outstanding share of 8.255% PRIDES,
Convertible Preferred Stock (the "PRIDES"), into one share of Kaiser's
Common Stock, with the remaining approximately 38% publicly held.

The foregoing unaudited interim consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X as promulgated by the Securities and
Exchange Commission. Accordingly, these financial statements do not
include all of the disclosures required by generally accepted accounting
principles for complete financial statements. These unaudited interim
consolidated financial statements should be read in conjunction with the
audited consolidated financial statements for the year ended December 31,
1996. In the opinion of management, the unaudited interim consolidated
financial statements furnished herein include all adjustments, all of which
are of a normal recurring nature, necessary for a fair statement of the
results for the interim periods presented.

The preparation of financial statements in accordance with generally
accepted accounting principles requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities known to exist as of the
date the financial statements are published, and the reported amounts of
revenues and expenses during the reporting period. Uncertainties with
respect to such estimates and assumptions are inherent in the preparation
of the Company's consolidated financial statements; accordingly, it is
possible that the actual results could differ from these estimates and
assumptions, which could have a material effect on the reported amounts of
the Company's consolidated financial position and results of operations.

Operating results for the quarter ended June 30, 1997, are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1997.

2. INVENTORIES

The classification of inventories is as follows:

<TABLE>

<CAPTION>
June 30, December 31,
1997 1996
------------------------------
<S> <C> <C>
Finished fabricated aluminum products $ 119.4 $ 113.5
Primary aluminum and work in process 189.8 200.3
Bauxite and alumina 125.7 110.2
Operating supplies and repair and maintenance parts 129.6 138.2
------------------------------

Total $ 564.5 $ 562.2
==============================

</TABLE>

Substantially all product inventories are stated at last-in, first-out
(LIFO) cost, not in excess of market. Replacement cost is not in excess of
LIFO cost.

3. SOLID WASTE DISPOSAL REVENUE BONDS

In March 1997, the Company entered into an agreement (the "Loan
Agreement") with the Industrial Development Corporation of Spokane County,
Washington (the "IDC") in connection with which the IDC issued $19.0 of
7.6% Solid Waste Disposal Revenue Bonds due 2027 (the "Bonds") and loaned
the proceeds to the Company to finance the construction of certain
qualifying expenditures at its Mead smelter, which are part of the
previously announced modernization and expansion of Mead's carbon baking
furnace. The net proceeds from the sale of the Bonds of approximately
$18.6 were deposited into a restricted construction account (the balance of
which is included in Other Assets) and may be withdrawn from time to time
by the Company, pursuant to the Loan Agreement and Bond indenture. The
Loan Agreement requires the Company to make payments on the dates and in
the amounts required to permit the IDC to satisfy all of its payment
obligations under the Bonds and related indenture.

4. CONTINGENCIES

ENVIRONMENTAL CONTINGENCIES
The Company is subject to a number of environmental laws, to fines or
penalties assessed for alleged breaches of such environmental laws, and to
claims and litigation based upon such laws. The Company currently is
subject to a number of lawsuits under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendments Reauthorization Act of 1986 ("CERCLA"), and, along
with certain other entities, has been named as a potentially responsible
party for remedial costs at certain third-party sites listed on the
National Priorities List under CERCLA.

Based on the Company's evaluation of these and other environmental
matters, the Company has established environmental accruals primarily
related to potential solid waste disposal and soil and groundwater
remediation matters. At June 30, 1997, the balance of such accruals, which
are primarily included in Long-term liabilities, was $31.9. These
environmental accruals represent the Company's estimate of costs reasonably
expected to be incurred based on presently enacted laws and regulations,
currently available facts, existing technology, and the Company's
assessment of the likely remediation actions to be taken. The Company
expects that these remediation actions will be taken over the next several
years and estimates that annual expenditures to be charged to these
environmental accruals will be approximately $3.0 to $9.0 for the years
1997 through 2001 and an aggregate of approximately $6.0 thereafter.

As additional facts are developed and definitive remediation plans and
necessary regulatory approvals for implementation of remediation are
established or alternative technologies are developed, changes in these and
other factors may result in actual costs exceeding the current
environmental accruals. The Company believes that it is reasonably
possible that costs associated with these environmental matters may exceed
current accruals by amounts that could range, in the aggregate, up to an
estimated $23.0 and that, subject to further regulatory review and
approval, the factors upon which a substantial portion of this estimate is
based are expected to be resolved during 1997. While uncertainties are
inherent in the final outcome of these environmental matters, and it is
presently impossible to determine the actual costs that ultimately may be
incurred, management currently believes that the resolution of such
uncertainties should not have a material adverse effect on the Company's
consolidated financial position, results of operations, or liquidity.

ASBESTOS CONTINGENCIES
The Company is a defendant in a number of lawsuits, some of which
involve claims of multiple persons, in which the plaintiffs allege that
certain of their injuries were caused by, among other things, exposure to
asbestos during, and as a result of, their employment or association with
the Company or exposure to products containing asbestos produced or sold by
the Company. The lawsuits generally relate to products the Company has not
manufactured for at least 20 years. At June 30, 1997, the number of such
claims pending was approximately 74,300, as compared with 71,100 at
December 31, 1996. In 1996, approximately 21,100 of such claims were
received and 9,700 were settled or dismissed. During the quarter and six
months ended June 30, 1997, approximately 3,000 and 5,600 of such claims
were received and 1,200 and 2,400 of such claims were settled or dismissed,
respectively.

Based on past experience and reasonably anticipated future activity,
the Company has established an accrual for estimated asbestos-related costs
for claims filed and estimated to be filed through 2008. There are
inherent uncertainties involved in estimating asbestos-related costs, and
the Company's actual costs could exceed or be less than these estimates.
The Company's accrual was calculated based on the current and anticipated
number of asbestos-related claims, the prior timing and amounts of
asbestos-related payments, and the advice of Wharton Levin Ehrmantraut
Klein & Nash, P. A. with respect to the current state of the law related to
asbestos claims. Accordingly, an estimated asbestos-related cost accrual
of $157.3, before consideration of insurance recoveries, is included
primarily in Long-term liabilities at June 30, 1997. While the Company
does not presently believe there is a reasonable basis for estimating such
costs beyond 2008 and, accordingly, no accrual has been recorded for such
costs which may be incurred beyond 2008, there is a reasonable possibility
that such costs may continue beyond 2008, and such costs may be
substantial. The Company estimates that annual future cash payments in
connection with such litigation will be approximately $13.0 to $20.0 for
each of the years 1997 through 2001, and an aggregate of approximately
$81.0 thereafter.

The Company believes that it has insurance coverage available to
recover a substantial portion of its asbestos-related costs. Claims for
recovery from some of the Company's insurance carriers are currently
subject to pending litigation and other carriers have raised certain
defenses, which have resulted in delays in recovering costs from the
insurance carriers. The timing and amount of ultimate recoveries from
these insurance carriers are dependent upon the resolution of these
disputes. The Company believes, based on prior insurance-related
recoveries in respect of asbestos-related claims, existing insurance
policies, and the advice of Thelen, Marrin, Johnson & Bridges LLP with
respect to applicable insurance coverage law relating to the terms and
conditions of those policies, that substantial recoveries from the
insurance carriers are probable. Accordingly, an estimated aggregate
insurance recovery of $131.8, determined on the same basis as the asbestos-
related cost accrual, is recorded primarily in Other assets at June 30,
1997.

Management continues to monitor claims activity, the status of
lawsuits (including settlement initiatives), legislative progress, and
costs incurred in order to ascertain whether an adjustment to the existing
accruals should be made to the extent that historical experience may differ
significantly from the Company's underlying assumptions. While
uncertainties are inherent in the final outcome of these asbestos matters
and it is presently impossible to determine the actual costs that
ultimately may be incurred and insurance recoveries that will be received,
management currently believes that, based on the factors discussed in the
preceding paragraphs, the resolution of asbestos-related uncertainties and
the incurrence of asbestos-related costs net of related insurance
recoveries should not have a material adverse effect on the Company's
consolidated financial position, results of operations, or liquidity.

OTHER CONTINGENCIES
The Company is involved in various other claims, lawsuits, and other
proceedings relating to a wide variety of matters. While uncertainties are
inherent in the final outcome of such matters, and it is presently
impossible to determine the actual costs that ultimately may be incurred,
management currently believes that the resolution of such uncertainties and
the incurrence of such costs should not have a material adverse effect on
the Company's consolidated financial position, results of operations, or
liquidity.

See Note 9 of the Notes to Consolidated Financial Statements for the
year ended December 31, 1996.

5. DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING PROGRAMS

At June 30, 1997, the net unrealized loss, including unamortized net
option premiums, on the Company's position in aluminum forward sales and
option contracts, (based on an average price of $1,621 per ton* ($.74 per
pound) of primary aluminum), natural gas and fuel oil forward purchase and
option contracts, and forward foreign exchange contracts, was approximately
$13.6.

* All references to tons in this report refer to metric tons of 2,204.6 pounds.

ALUMINA AND ALUMINUM
The Company's earnings are sensitive to changes in the prices of
alumina, primary aluminum and fabricated aluminum products, and also depend
to a significant degree upon the volume and mix of all products sold.
Primary aluminum prices have historically been subject to significant
cyclical fluctuations. During the period January 1, 1993 through June 30,
1997, the Average Midwest United States transaction price for primary
aluminum has ranged from approximately $.50 to $1.00 per pound. Alumina
prices as well as fabricated aluminum product prices (which vary
considerably among products) are significantly influenced by changes in the
price of primary aluminum but generally lag behind primary aluminum price
changes by up to three months.

From time to time in the ordinary course of business, the Company
enters into hedging transactions to provide price risk management in
respect of the net exposure of earnings resulting from (i) anticipated
sales of alumina, primary aluminum and fabricated aluminum products, less
(ii) expected purchases of certain items, such as aluminum scrap, rolling
ingot, and bauxite, whose prices fluctuate with the price of primary
aluminum. Forward sales contracts are used by the Company to effectively
lock-in or fix the price that the Company will receive for its shipments.
The Company also uses option contracts (i) to establish a minimum price for
its product shipments, (ii) to establish a "collar" or range of prices for
the Company's anticipated sales, and/or (iii) to permit the Company to
realize possible upside price movements. As of June 30, 1997, the Company
had sold forward, at fixed prices, approximately 34,500, 93,600 and 24,000
tons of primary aluminum with respect to 1997, 1998 and 1999, respectively.
As of June 30, 1997, the Company had also purchased put options to
establish a minimum price for approximately 91,100 and 52,000 tons of
primary aluminum with respect to 1997 and 1998, respectively, and had
entered into option contracts that established a price range for an
additional 78,000, 231,600 and 124,500 tons for 1997, 1998 and 1999,
respectively.

As of June 30, 1997, the Company had sold forward virtually all of the
alumina available to it in excess of its projected internal smelting
requirements for 1997, 1998 and 1999 at prices indexed to future prices of
primary aluminum.

ENERGY
The Company is exposed to energy price risk from fluctuating prices
for fuel oil and natural gas consumed in the production process.
Accordingly, the Company from time to time in the ordinary course of
business enters into hedging transactions with major suppliers of energy
and energy related financial instruments. As of June 30, 1997, the Company
had a combination of fixed price purchase and option contracts for the
purchase of approximately 40,000 MMBtu of natural gas per day during the
remainder of 1997, and for 25,000 MMBtu of natural gas per day for 1998.
As of June 30, 1997, the Company also held a combination of fixed price
purchase and option contracts for an average of 216,000, 222,000 and 25,000
barrels of fuel oil per month for 1997, 1998, and 1999, respectively.

FOREIGN CURRENCY
The Company enters into forward exchange contracts to hedge material
cash commitments to foreign subsidiaries or affiliates. At June 30, 1997,
the Company had net forward foreign exchange contracts totaling
approximately $147.8 for the purchase of 192.0 Australian dollars from July
1997 through December 1998, in respect of its commitments for 1997 and 1998
expenditures denominated in Australian dollars. At June 30, 1997, KACC
also held options to purchase approximately 20.0 Australian dollars over
the last six months of 1997.

See Note 10 of the Notes to Consolidated Financial Statements for the
year ended December 31, 1996.

6. RESTRUCTURING OF OPERATIONS

The Company has previously disclosed that it set a goal of achieving
significant cost reductions and other profit improvements, with the full
effect planned to be realized in 1998. The initiative is based on the
Company's conclusion that the current level of performance of its existing
facilities and businesses will not achieve the level of profits the Company
considers satisfactory based upon historic long-term average prices for
primary aluminum and alumina. During the second quarter of 1997, the
Company recorded a $19.7 restructuring charge to reflect actions taken and
plans put in place to achieve the reduced production costs, decreased
corporate selling, general and administrative expenses, and enhanced
product mix intended to achieve this goal. The significant components of
the restructuring charge are enumerated below.

ERIE PLANT DISPOSITION
During the second quarter of 1997, the Company formed a joint venture
with a third party related to the assets and liabilities associated with
the wheel manufacturing operations at its Erie, Pennsylvania, fabrication
plant. The Credit Agreement was amended to provide for the formation of
the new entity. Management subsequently decided to close the remainder of
the Erie plant in order to consolidate its aluminum forgings operations at
two other facilities for increased efficiency. As a result of the joint
venture formation and plant closure, the Company recognized a net pre-tax
loss of approximately $1.4.

OTHER ASSET DISPOSITIONS
As a part of the Company's profit enhancement and cost reduction
initiative, management made decisions regarding product rationalization and
geographical optimization, which led management to decide to dispose of
certain assets which had nominal operating contribution. These strategic
decisions resulted in the Company recognizing a pre-tax charge for
approximately $15.6 associated with such asset dispositions.

EMPLOYEE AND OTHER COSTS
As a part of the Company's profit enhancement and cost reduction
initiative, management concluded that certain corporate and other staff
functions could be consolidated or eliminated resulting in a pre-tax charge
of approximately $2.7 for benefit and other costs.

7. COMPLETED ACQUISITION

During June 1997, Kaiser Bellwood Corporation, a newly formed, wholly
owned subsidiary of the Company, completed the acquisition of Reynolds
Metals Company's Bellwood, Virginia, extrusion plant and its existing
inventories for a total purchase price of $44.1, consisting of cash
payments of $40.1 and the assumption of approximately $4.0 of employee
related and other liabilities. The purchase price is subject to certain
post-closing adjustments.

The Company's Credit Agreement was amended in June 1997, to provide
for the acquisition of the Bellwood facility. Additionally, upon
completion of the transaction, Kaiser Bellwood Corporation became a
subsidiary guarantor under the indentures in respect of the Company's
9-7/8% Senior Notes due 2002, 10-7/8% Series B and Series D Senior Notes
due 2006, and 12-3/4% Senior Subordinated Notes due 2003.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------

This section should be read in conjunction with the response to Item
1, Part I, of this Report.

This section contains statements which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. These statements appear in a number of places in this section
(see, for example, "Profit Enhancement and Cost Reduction Initiative,"
"Results of Operations," and "Liquidity and Capital Resources"). Such
statements can be identified by the use of forward-looking terminology such
as "believes," "expects," "may," "estimates," "will," "should," "plans" or
"anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy. Readers are
cautioned that any such forward-looking statements are not guarantees of
future performance and involve significant risks and uncertainties, and
that actual results may vary materially from those in the forward-looking
statements as a result of various factors. These factors include the
effectiveness of management's strategies and decisions, general economic
and business conditions, developments in technology, new or modified
statutory or regulatory requirements, and changing prices and market
conditions. This section and the Company's Annual Report on Form 10-K for
the year ended December 31, 1996, each identify other factors that could
cause such differences. No assurance can be given that these are all of
the factors that could cause actual results to vary materially from the
forward-looking statements.

PROFIT ENHANCEMENT AND COST REDUCTION INITIATIVE

The Company has previously disclosed that it has set a goal of
achieving significant cost reductions and other profit improvements, with
the full effect planned to be realized in 1998. The initiative is based on
the Company's conclusion that the current level of performance of its
existing facilities and businesses will not achieve the level of profits
the Company considers satisfactory based upon historic long-term average
prices for primary aluminum and alumina. During the second quarter of
1997, the Company recorded a $19.7 million restructuring charge to reflect
actions taken and plans put in place to achieve the reduced production
costs, decreased corporate selling, general and administrative expenses,
and enhanced product mix intended to achieve this goal. The significant
components of the restructuring charge are discussed in Note 6 of the Notes
to Interim Consolidated Financial Statements.

RECENT EVENTS

During June 1997, Kaiser Bellwood Corporation, a newly formed, wholly
owned subsidiary of the Company, completed the acquisition of Reynolds
Metals Company's Bellwood, Virginia, extrusion plant and its existing
inventories for a total purchase price of $44.1 million, subject to certain
post-closing adjustments. See Note 7 of Notes to Interim Consolidated
Financial Statements.

RESULTS OF OPERATIONS

The table on the following page provides selected operational and
financial information on a consolidated basis with respect to the Company
for the quarters and six month periods ended June 30, 1997, and 1996. As
an integrated aluminum producer, the Company uses a portion of its bauxite,
alumina, and primary aluminum production for additional processing at
certain of its other facilities. Intracompany shipments and sales are
excluded from the information set forth on the following page.

Interim results are not necessarily indicative of those for a full
year.

SELECTED OPERATIONAL AND FINANCIAL INFORMATION
(Unaudited)
(In millions of dollars, except shipments and prices)

<TABLE>

Aluminum products:
Primary aluminum 82.0 100.0 160.5 174.8
Fabricated aluminum products 100.4 85.1 194.3 162.3
------------------------------ ------------------------------
Total aluminum products 182.4 185.1 354.8 337.1
============================== ==============================

Average realized sales price:
Alumina (per ton) $ 196 $ 207 $ 193 $ 208
Primary aluminum (per pound) .75 .69 .75 .71

Net sales:
Bauxite and alumina:
Alumina $ 96.5 $ 89.5 $ 169.7 $ 188.5
Other (2) (3) 26.5 27.0 53.1 51.4
------------------------------ ------------------------------
Total bauxite and alumina 123.0 116.5 222.8 239.9
------------------------------ ------------------------------

Aluminum processing:
Primary aluminum 135.3 153.1 264.5 272.2
Fabricated aluminum products 334.5 294.1 648.9 579.0
Other (3) 4.3 3.9 8.3 7.6
------------------------------ ------------------------------
Total aluminum processing 474.1 451.1 921.7 858.8
------------------------------ ------------------------------
Total net sales $ 597.1 $ 567.6 $ 1,144.5 $ 1,098.7
============================== ==============================

Operating income (loss):
Bauxite and alumina $ 7.5 $ 1.1 $ 6.0 $ 10.9
Aluminum processing (4) 46.2 50.2 97.5 98.7
Corporate (5) (18.1) (14.5) (35.1) (32.2)
------------------------------ ------------------------------
Total operating income $ 35.6 $ 36.8 $ 68.4 $ 77.4
============================== ==============================

Net income $ 14.6 $ 9.4 $ 18.9 $ 20.5
============================== ==============================

Capital expenditures:
Property, plant, and equipment $ 47.0 $ 31.9 $ 68.8 $ 51.9
============================== ==============================

<FN>

- ---------------------------------
(1) In thousands of metric tons.
(2) Includes net sales of bauxite.
(3) Includes the portion of net sales attributable to minority interests
in consolidated subsidiaries.
(4) Includes a pre-tax charge of $15.1 related to restructuring of
operations for both the quarter and six month period ended June 30,
1997.
(5) Includes a pre-tax charge of $4.6 related to restructuring of
operations for both the quarter and six month period ended June 30,
1997.

</TABLE>

OVERVIEW
The Company's operating results are sensitive to changes in prices of
alumina, primary aluminum, and fabricated aluminum products, and also
depend to a significant degree on the volume and mix of all products sold
and on the Company's hedging strategies. Primary aluminum prices have
historically been subject to significant cyclical fluctuations. Alumina
prices as well as fabricated aluminum product prices (which vary
considerably among products) are significantly influenced by changes in the
price of primary aluminum but generally lag behind primary aluminum price
changes by up to three months.

During the first half of 1996, the Average Midwest United States
transaction price ("AMT Price") for primary aluminum remained relatively
stable in the $.70 - $.75 per pound range. During the second half of the
year the AMT Price for primary aluminum fell, reaching a low of $.65 per
pound for October 1996, before recovering late in the year. During the
period 1993- June 30, 1997, the AMT Price for primary aluminum ranged from
approximately $.50 to $1.00 per pound. The AMT Price for primary aluminum
for the week ended July 25, 1997, was approximately $.78 per pound.

See Note 5 of the Notes to Interim Consolidated Financial Statements
for a discussion of the Company's hedging activities.

QUARTER AND SIX MONTHS ENDED JUNE 30, 1997, COMPARED TO QUARTER AND SIX
MONTHS ENDED JUNE 30, 1996

SUMMARY
The Company reported net income of $14.6 million for the second
quarter of 1997 compared to net income of $9.4 million for the same period
of 1996. Net sales in the second quarter of 1997 totaled $597.1 million
compared to $567.6 million in the second quarter of 1996.

For the six-month period ended June 30, 1997, net income was $18.9
million compared to net income of $20.5 million for the six-month period
ended June 30, 1996. Net sales for the six months ended June 30, 1997,
were $1,144.5 million compared to $1,098.7 million for the first six months
of 1996.

Results for the quarter and six month period ended June 30, 1997,
include the effect of certain non-recurring items including a $19.7 million
restructuring charge (discussed above), an approximate $12.5 million non-
cash tax benefit related to settlement of certain matters and a $5.8
million charge related to additional litigation reserves. Excluding these
items, net income for the quarter and six month period ended June 30, 1997,
would have been approximately $17.9 million and $22.2 million,
respectively.

BAUXITE AND ALUMINA
Net sales of alumina increased by 8% for the quarter ended June 30,
1997, from the comparable period in the prior year, as a result of a 14%
increase in alumina shipments offset by a 5% decline in average prices
realized from the sale of alumina. Shipment volumes were up as compared to
the quarter ended June 30, 1996, primarily as a result of the timing of
shipments. For the six month period ended June 30, 1997, net segment sales
declined by 7%, from the comparable period in the prior year. This change
was due primarily to a 7% decrease in average realized prices between
periods and to a lesser extent due to a 3% reduction in shipments.

Segment operating income improved substantially on a quarter to
quarter basis but declined by 45% for the comparative six month periods.
On a quarterly basis, the improvement resulted primarily from improved
operating efficiencies and reduced raw material and energy prices. On a
year-to-date basis, however, these amounts were not sufficient to offset
the impact of both a reduction in average realized alumina prices as well
as alumina shipments.

ALUMINUM PROCESSING
Net sales of primary aluminum for the quarter ended June 30, 1997,
decreased by 12% from the comparable prior year period as a result of a 18%
decrease in shipments offset by an 8% increase in average realized prices.
The decrease in primary aluminum shipments between periods is the result of
the higher than usual shipments in the second quarter of 1996. Net sales
of fabricated aluminum products for the quarter ended June 30, 1997, were
up 14% as compared to the prior year period as a result of a 18% increase
in shipments offset by a 4% decrease in average realized prices. The
increase in fabricated aluminum product shipments over the second quarter
of 1996 was due to increased international sales of can sheet and increased
shipments of heat-treated products.

For the six month period ended June 30, 1997, net sales for the
aluminum processing segment increased by approximately 7% as a 12% increase
in fabricated aluminum product net sales more than offset a 3% decline in
net sales of primary aluminum. The increase in fabricated product net
sales, and offsetting decrease in primary aluminum net sales, resulted from
the same shipment and price factors discussed in the preceding paragraph.

In addition to being affected by the price and volume factors
discussed above, the Aluminum Processing segment's operating income also
benefited from reduced power, raw material and supply costs as well as
improved operating efficiencies. In addition, the segment's operating
income for the quarter and six month period ended June 30, 1997, includes
approximately $2.3 million and $5.2 million of operating income realized
during the periods, related to the settlement of certain energy service
contracts and a $15.1 million charge resulting from the previously
discussed restructuring of operations.

CORPORATE
Corporate operating expenses represent corporate general and
administrative expenses, which are not allocated to the Company's business
segments. Operating results for the quarter and six month period ended
June 30, 1997, both include a pre-tax charge of approximately $4.6 million
associated with the Company's restructuring of operations.

LIQUIDITY AND CAPITAL RESOURCES

OPERATING ACTIVITIES
At June 30, 1997, the Company had working capital of $457.8 million,
compared with working capital of $409.3 million at December 31, 1996. The
increase in working capital was due primarily to an increase in Receivables
and a decrease in Accounts payable partially offset by a decrease in Cash
and cash equivalents.

INVESTING ACTIVITIES
Capital expenditures during the quarter and six months ended June 30,
1997, were $47.0 million and $68.8 million, respectively, and were used
primarily to acquire the Bellwood extrusion facility from Reynolds, improve
production efficiency, reduce operating costs, expand capacity at existing
facilities, and construct new facilities. The Company's first
Micromill(TM) facility, which was constructed in Nevada during 1996 as a
demonstration and production facility, achieved operational start-up by
year-end 1996. The facility remained in a start-up mode during the first
half of 1997 and is currently expected to commence limited product
shipments to customers in the latter part of the year.

Total consolidated capital expenditures (of which approximately 7% is
expected to be funded by the Company's minority partners in certain foreign
joint ventures) are expected to be between $70.0 and $140.0 million per
annum in each of 1997 through 1999. Management continues to evaluate
numerous projects all of which require substantial capital, including the
Company's Micromill(TM) project, and other potential opportunities both in
the United States and overseas.

Kaiser Yellow River Investment Limited ("KYRIL"), a subsidiary of the
Company, is a participant in Yellow River Aluminum Industry Company
Limited, a Sino-foreign joint equity enterprise (the "Joint Venture")
organized under the laws of the People's Republic of China ("PRC") along
with the Lanzhou Aluminum Smelters ("LAS") of the China National Nonferrous
Metals Industry Corporation (the "CNNC"). The parties to the Joint
Venture are currently engaged in discussions concerning the future of the
Joint Venture. In a June 1997 meeting, representatives of the Company and
the CNNC agreed to extend the Joint Venture termination date from June 30,
1997 to March 31, 1998. Negotiations between KYRIL, LAS and the CNNC
continue to focus on a sale of KYRIL's interests to a third party or LAS
and/or the CNNC making a payment to KYRIL in return for its existing
interests in the Joint Venture. However, no agreement has been reached
concerning the amount of or terms for any such payments. Governmental
approval in the PRC will be necessary in order to implement any
arrangements agreed to by the parties, and there can be no assurance such
approval will be obtained.

FINANCING ACTIVITIES AND LIQUIDITY

At June 30, 1997, the Company had long-term debt of $1,005.4 million,
compared with $961.9 million at December 31, 1996. The change in long-term
debt between periods is primarily the result of $30.0 million of borrowings
under the Credit Agreement and $19.0 million of proceeds from the Spokane
County, Washington, Solid Waste Disposal Revenue Bonds which were loaned to
the Company to finance certain qualifying capital expenditures at its Mead
smelter.

At June 30, 1997, $243.8 million (of which $73.8 million could have
been used for letters of credit) was available to the Company under the
Credit Agreement. Loans under the Credit Agreement bear interest at a
spread (which varies based on the results of a financial test) over either
a base rate or LIBOR at the Company's option. During the quarter and six
month period ended June 30, 1997, the average per annum interest rates on
loans outstanding under the Credit Agreement were approximately 9.5% and
9.6%, respectively. The Credit Agreement does not permit the Company to
pay any dividends on its common stock.

During the quarter ended June 30, 1997, the Credit Agreement was
amended to provide for the formation of the wheel manufacturing joint
venture and the acquisition of the Bellwood facility. Additionally, upon
completion of the acquisition of the Bellwood facility, Kaiser Bellwood
Corporation became a subsidiary guarantor under the indentures in respect
of the Company's 9-7/8% Senior Notes due 2002, 10-7/8% Series B and Series
D Senior Notes due 2006, and 12-3/4% Senior Subordinated Notes due 2003.

Management believes that the Company's existing cash resources,
together with cash flows from operations and borrowings under the Credit
Agreement, will be sufficient to meet its working capital and capital
expenditure requirements for the next year. Additionally, with respect to
long-term liquidity, management believes that operating cash flow, together
with the ability to obtain both short and long-term financing, should
provide sufficient funds to meet the Company's working capital and capital
expenditure requirements.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
-----------------

CATELLUS DEVELOPMENT CORPORATION V. KAISER ALUMINUM & CHEMICAL CORPORATION
AND JAMES L FERRY & SON INC.

On July 28, 1997, the Company and Catellus Development Corporation
("Catellus") entered into a settlement agreement and release settling all
matters pending between the parties in the Untied States Court of Appeals
for the Ninth Circuit. All matters relating to the litigation have now
been resolved. The Company will remain liable to the City of Richmond for
fifty percent (50%) of future costs of cleaning up certain parts of the
property formerly owned by Catellus in accordance with the final judgement
issued by the United States District Court. The Company's share of these
costs is expected to be less than $500,000. See Part I, Item 3. "LEGAL
PROCEEDINGS - Catellus Development Corporation v. Kaiser Aluminum &
Chemical Corporation and James L Ferry & Son Inc." in the Company's Form
10-K for the year ended December 31, 1996.

ASBESTOS-RELATED LITIGATION

The Company is a defendant in a number of lawsuits, some of which
involve claims of multiple persons, in which the plaintiffs allege that
certain of their injuries were caused by, among other things, exposure to
asbestos during, and as a result of, their employment or association with
the Company or exposure to products containing asbestos produced or sold by
the Company. The portion of Note 4 of the Notes to Interim Consolidated
Financial Statements contained in this report under the heading "Asbestos
Contingencies" is incorporated herein by reference. See Part I, Item 3.
"LEGAL PROCEEDINGS - Asbestos-related Litigation" in the Company's Form 10-
K for the year ended December 31, 1996.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------

The annual meeting of stockholders of the Company was held on June 4,
1997, at which meeting the stockholders voted to elect management's slate
of nominees as directors of the Company and approved the Kaiser 1997
Omnibus Stock Incentive Plan.

The results of the matters voted on at the meeting are shown below.

NOMINEES FOR DIRECTOR

The nominees for election as directors of the Company are listed
below, together with the number of votes cast for, against, and withheld
with respect to each such nominee, as well as the number of abstentions and
broker nonvotes with respect to each such nominee:

Robert J. Cruikshank
Votes For: 46,601,842
Votes Against:
Votes Withheld: 173,422
Abstentions:
Broker Nonvotes:

George T. Haymaker, Jr.
Votes For: 46,595,469
Votes Against:
Votes Withheld: 179,795
Abstentions:
Broker Nonvotes:

Charles E. Hurwitz
Votes For: 46,579,083
Votes Against:
Votes Withheld: 196,181
Abstentions:
Broker Nonvotes:

Ezra G. Levin
Votes For: 46,601,842
Votes Against:
Votes Withheld: 173,422
Abstentions:
Broker Nonvotes:

Robert Marcus
Votes For: 46,598,284
Votes Against:
Votes Withheld: 176,980
Abstentions:
Broker Nonvotes:

Robert J. Petris
Votes For: 46,492,354
Votes Against:
Votes Withheld: 282,910
Abstentions:
Broker Nonvotes:

KAISER 1997 OMNIBUS STOCK INCENTIVE PLAN

The vote with respect to the proposal to approve the Kaiser 1997
Omnibus Stock Incentive Plan was as follows:

Votes For: 46,469,974
Votes Against: 176,929
Votes Withheld:
Abstentions: 128,361
Broker Nonvotes

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------

(a) Exhibits.

Exhibit No. Exhibit
----------- -------

3.1 Restated Certificate of Incorporation of Kaiser Aluminum &
Chemical Corporation (the "Company" or "KACC"), dated July 25,
1989 (incorporated by reference to Exhibit 3.1 to the
Registration Statement on Form S-1, dated August 25, 1989, filed
by KACC, Registration No. 33-30645).

3.2 Certificate of Retirement of KACC, dated February 7, 1990
(incorporated by reference to Exhibit 3.2 to the Report on Form
10-K for the period ended December 31, 1989, filed by KACC, File
No. 1-3605).

*3.3 Amended and Restated Bylaws of KACC, dated July 22, 1997.

*4.1 Third Supplemental Indenture, dated as of July 15, 1997, among
KACC, as Issuer, Kaiser Alumina Australia Corporation, Alpart
Jamaica Inc., Kaiser Jamaica Corporation, Kaiser Finance
Corporation, Kaiser Micromill Holdings, LLC, Kaiser Sierra
Micromills, LLC, Kaiser Texas Sierra Micromills, LLC, Kaiser
Texas Micromill Holdings, LLC, and Kaiser Bellwood Corporation,
as Subsidiary Guarantors, and State Street Bank and Trust
Company, as Trustee, to the Indenture, dated as of February 1,
1993, regarding KACC's 12-3/4% Senior Subordinated Notes due
2003.

*4.2 Second Supplemental Indenture, dated as of July 15, 1997, among
KACC, as Issuer, Kaiser Alumina Australia Corporation, Alpart
Jamaica Inc., Kaiser Jamaica Corporation, Kaiser Finance
Corporation, Kaiser Micromill Holdings, LLC, Kaiser Sierra
Micromills, LLC, Kaiser Texas Sierra Micromills, LLC, Kaiser
Texas Micromill Holdings, LLC, and Kaiser Bellwood Corporation,
as Subsidiary Guarantors, and First Trust National Association,
as Trustee, to the Indenture, dated as of February 17, 1994,
regarding KACC's 9-7/8% Senior Notes due 2002.

*4.3 First Supplemental Indenture, dated as of July 15, 1997, among
KACC, as Issuer, Kaiser Alumina Australia Corporation, Alpart
Jamaica Inc., Kaiser Jamaica Corporation, Kaiser Finance
Corporation, Kaiser Micromill Holdings, LLC, Kaiser Sierra
Micromills, LLC, Kaiser Texas Micromill Holdings, LLC, Kaiser
Texas Sierra Micromills, LLC, and Kaiser Bellwood Corporation, as
Subsidiary Guarantors, and First Trust National Association, as
Trustee, to the Indenture, dated as of October 23, 1996,
regarding KACC's 10-7/8% Series B Senior Notes due 2006.

*4.4 First Supplemental Indenture, dated as of July 15, 1997, among
KACC, as Issuer, Kaiser Alumina Australia Corporation, Alpart
Jamaica Inc., Kaiser Jamaica Corporation, Kaiser Finance
Corporation, Kaiser Micromill Holdings, LLC, Kaiser Sierra
Micromills, LLC, Kaiser Texas Micromill Holdings, LLC, Kaiser
Texas Sierra Micromills, LLC, and Kaiser Bellwood Corporation, as
Subsidiary Guarantors, and First Trust National Association, as
Trustee, to the Indenture, dated as of December 23, 1996,
regarding KACC's 10-7/8% Series D Senior Notes due 2006.

*4.5 Ninth Amendment to the Credit Agreement, dated as of April 21,
1997, amending the Credit Agreement, dated as of February 15,
1994, as amended, among KACC, Kaiser Aluminum Corporation
("KAC"), the financial institutions a party thereto, and
BankAmerica Business Credit, Inc., as Agent.

*4.6 Tenth Amendment to the Credit Agreement, dated as of June 25,
1997, amending the Credit Agreement, dated as of February 15,
1994, as amended, among KACC, KAC, the financial institutions a
party thereto, and BankAmerica Business Credit, Inc., as Agent.

*27 Financial Data Schedule.

(b) Reports on Form 8-K.

No report on Form 8-K was filed by the Company during the quarter
ended June 30, 1997.

- ---------------
* Filed herewith

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized, who have signed this report on
behalf of the registrant as the principal financial officer and principal
accounting officer of the registrant, respectively.

KAISER ALUMINUM & CHEMICAL
CORPORATION

/s/ John T. La Duc
By: --------------------------
John T. La Duc
Vice President and
Chief Financial Officer
(Principal Financial Officer)

/s/Arthur S. Donaldson
By: --------------------------
Arthur S. Donaldson
Controller
(Principal Accounting Officer)

Dated: August 1, 1997

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements of the Company for the six months ended
June 30, 1997, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000054291
<NAME> KAISER ALUMINUM & CHEMICAL CORPORATION
<MULTIPLIER> 1,000,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 17
<SECURITIES> 0
<RECEIVABLES> 294
<ALLOWANCES> 5
<INVENTORY> 565
<CURRENT-ASSETS> 1,010
<PP&E> 1,161
<DEPRECIATION> 46
<TOTAL-ASSETS> 2,972
<CURRENT-LIABILITIES> 552
<BONDS> 1,000
27
2
<COMMON> 15
<OTHER-SE> 65
<TOTAL-LIABILITY-AND-EQUITY> 2,972
<SALES> 1,145
<TOTAL-REVENUES> 1,145
<CGS> 950
<TOTAL-COSTS> 950
<OTHER-EXPENSES> 106
<LOSS-PROVISION> 20
<INTEREST-EXPENSE> 56
<INCOME-PRETAX> 12
<INCOME-TAX> (8)
<INCOME-CONTINUING> 19
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19
<EPS-PRIMARY> .00
<EPS-DILUTED> .00

</TABLE>

<PAGE>

- ---------------------------------------------------------------

KAISER ALUMINUM & CHEMICAL CORPORATION, as Issuer,

KAISER ALUMINA AUSTRALIA CORPORATION,
ALPART JAMAICA INC.,
KAISER JAMAICA CORPORATION,
KAISER FINANCE CORPORATION,
KAISER MICROMILL HOLDINGS, LLC,
KAISER SIERRA MICROMILLS, LLC,
KAISER TEXAS SIERRA MICROMILLS, LLC,
KAISER TEXAS MICROMILL HOLDINGS, LLC, and
KAISER BELLWOOD CORPORATION, as
Subsidiary Guarantors

and

FIRST TRUST NATIONAL ASSOCIATION, as Trustee

FIRST SUPPLEMENTAL INDENTURE

Dated as of July 15, 1997

INDENTURE

Dated As of October 23, 1996

10-7/8% Series B Senior Notes due 2006

- ---------------------------------------------------------------

FIRST SUPPLEMENTAL INDENTURE, dated as of July 15,
1997, among KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware
corporation (the "Company"), as Issuer, KAISER ALUMINA AUSTRALIA
CORPORATION, a Delaware corporation ("KAAC"), ALPART JAMAICA
INC., a Delaware corporation ("AJI"), KAISER JAMAICA CORPORATION,
a Delaware corporation ("KJC"), KAISER FINANCE CORPORATION, a
Delaware corporation ("Kaiser Finance"), KAISER MICROMILL
HOLDINGS, LLC, a Delaware limited liability company ("KMH"),
KAISER SIERRA MICROMILLS, LLC, a Delaware limited liability
company ("KSM"), KAISER TEXAS SIERRA MICROMILLS, LLC, a Texas
limited liability company ("Texas Sierra"), KAISER TEXAS
MICROMILL HOLDINGS, LLC, a Texas limited liability company
("Texas Holdings"), and KAISER BELLWOOD CORPORATION, a Delaware
corporation ("Kaiser Bellwood"), as Subsidiary Guarantors, and
First Trust National Association, a national banking association,
as Trustee (the "Trustee").

WHEREAS, the Company, KAAC, AJI, KJC, Kaiser Finance,
KMH, KSM, Texas Sierra, Texas Holdings, and the Trustee executed
an Indenture, dated as of October 23, 1996 (the "Indenture"), in
respect of $175,000,000 aggregate principal amount of the
Company's 10-7/8% Series B Senior Notes due 2006 (the
"Securities"); and

WHEREAS, Section 4.12 of the Indenture requires, under
circumstances specified in Section 4.12, that the Company shall
cause certain Subsidiaries of the Company to execute and deliver
to the Trustee a supplemental indenture in form and substance
satisfactory to the Trustee pursuant to which such Subsidiaries
of the Company shall be named as additional Subsidiary
Guarantors; and

WHEREAS, all conditions and requirements necessary to
make this First Supplemental Indenture a valid, binding and legal
instrument in accordance with its terms have been performed and
fulfilled and the execution and delivery hereof have been in all
respects duly authorized;

NOW, THEREFORE, in consideration of the above premises,
each party agrees, for the benefit of the other and for the equal
and ratable benefit of the Holders of the Securities, as follows:

ARTICLE I

AMENDMENTS

Section 1. The Company, KAAC, AJI, KJC, Kaiser
Finance, KMH, KSM, Texas Sierra, Texas Holdings, Kaiser Bellwood,
and the Trustee hereby amend the Indenture and agree that Kaiser
Bellwood shall be a Subsidiary Guarantor for all purposes under
the Indenture and the term "Subsidiary Guarantor" shall for all
purposes under the Indenture specifically include Kaiser
Bellwood.

ARTICLE II

MISCELLANEOUS PROVISIONS

Section 2.1. Terms Defined. For all purposes of this
First Supplemental Indenture, except as otherwise defined or
unless the context otherwise requires, terms used in capitalized
form in this First Supplemental Indenture and defined in the
Indenture have the meanings specified in the Indenture.

Section 2.2. Indenture. Except as amended hereby, the
Indenture and the Securities are in all respects ratified and
confirmed and all their terms shall remain in full force and
effect.

Section 2.3. Governing Law. This First Supplemental
Indenture shall be deemed to be a contract made under the laws of
the State of New York, and for all purposes shall be governed by
and construed in accordance with the laws of said state without
regard to the principles of the conflict of laws provisions
thereof.

Section 2.4. Successors and Assigns. All agreements
of the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas
Sierra, Texas Holdings, and Kaiser Bellwood in this First
Supplemental Indenture and the Securities shall bind its
successors and assigns.

Section 2.5. Multiple Counterparts. This First
Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same
instrument.

Section 2.6. Effectiveness. The provisions of this
First Supplemental Indenture shall become effective immediately
upon its execution and delivery by the Trustee in accordance with
the provisions of Article Ten of the Indenture.

Section 2.7. Trustee Disclaimer. The Trustee accepts
the amendment of the Indenture effected by this First
Supplemental Indenture and agrees to execute the trust created by
the Indenture as hereby amended, but only upon the terms and
conditions set forth in the Indenture, including the terms and
provisions defining and limiting the liabilities and
responsibilities of the Trustee, which terms and provisions shall
in like manner define and limit its liabilities and
responsibilities in the performance of the trust created by the
Indenture as hereby amended, and, without limiting the generality
of the foregoing, the Trustee shall not be responsible in any
manner whatsoever for or with respect to any of the recitals or
statements contained herein, all of which recitals or statements
are made solely by the Company, KAAC, AJI, KJC, Kaiser Finance,
KMH, KSM, Texas Sierra, Texas Holdings, and Kaiser Bellwood, or
for or with respect to (i) the validity, efficacy or sufficiency
of this First Supplemental Indenture or any of the terms or
provisions hereof, (ii) the proper authorization hereof by the
Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra,
Texas Holdings, and Kaiser Bellwood by corporate action or
limited liability company action or otherwise, (iii) the due
execution hereof by the Company, KAAC, AJI, KJC, Kaiser Finance,
KMH, KSM, Texas Sierra, Texas Holdings, and Kaiser Bellwood, or
(iv) the consequences (direct or indirect and whether deliberate
or inadvertent) of any amendment herein provided for, and the
Trustee makes no representation with respect to any such matters.

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused this
First Supplemental Indenture to be duly executed, all as of the
date first written above.

KAISER ALUMINUM & CHEMICAL
CORPORATION, as Issuer

By: /s/ Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/ John Wm. Niemand II
------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER ALUMINA AUSTRALIA
CORPORATION, as a Subsidiary
Guarantor

By: /s/ Karen A. Twitchell
-----------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
------------------
Name: John Wm. Niemand II
Title: Secretary

ALPART JAMAICA INC.,
as a Subsidiary Guarantor

By:/s/ Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER JAMAICA CORPORATION,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
-----------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER FINANCE CORPORATION,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
-------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/ John Wm. Niemand II
------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER MICROMILL HOLDINGS,
LLC,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER SIERRA MICROMILLS, LLC,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
-------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER TEXAS SIERRA
MICROMILLS, LLC, as a
Subsidiary Guarantor

By:/s/Karen A. Twitchell
--------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER TEXAS MICROMILL
HOLDINGS, LLC, as a Subsidiary
Guarantor

By:/s/Karen A. Twitchell
-------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER BELLWOOD CORPORATION,
as a Subsidiary Guarantor

By:/s/ Karen A. Twitchell
-------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
------------------
Name: John Wm. Niemand II
Title: Secretary

FIRST TRUST NATIONAL
ASSOCIATION, as Trustee

By:/s/Kathe Barrett
------------------------
Name:Kathe Barrett
Title: Trust Officer

Dated: July 15, 1997

Attest: By:/s/Richard H. Prokosch
------------------
Name: Richard H. Prokosch
Title: Assistant
Secretrary

- ---------------------------------------------------------------

KAISER ALUMINUM & CHEMICAL CORPORATION, as Issuer,

and

FIRST TRUST NATIONAL ASSOCIATION, as Trustee

FIRST SUPPLEMENTAL INDENTURE

Dated as of July 15, 1997

INDENTURE

Dated As of December 23, 1996

10-7/8% Series D Senior Notes due 2006

- ---------------------------------------------------------------

WHEREAS, the Company, KAAC, AJI, KJC, Kaiser Finance,
KMH, KSM, Texas Sierra, Texas Holdings, and the Trustee executed
an Indenture, dated as of December 23, 1996 (the "Indenture"), in
respect of $50,000,000 aggregate principal amount of the
Company's 10-7/8% Series D Senior Notes due 2006 (the
"Securities"); and

NOW, THEREFORE, in consideration of the above premises,
each party agrees, for the benefit of the other and for the equal
and ratable benefit of the Holders of the Securities, as follows:

ARTICLE I

AMENDMENTS

ARTICLE II

MISCELLANEOUS PROVISIONS

Section 2.2. Indenture. Except as amended hereby, the
Indenture and the Securities are in all respects ratified and
confirmed and all their terms shall remain in full force and
effect.

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused this
First Supplemental Indenture to be duly executed, all as of the
date first written above.

KAISER ALUMINUM & CHEMICAL
CORPORATION, as Issuer

By:/s/Karen A. Twitchell
--------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER ALUMINA AUSTRALIA
CORPORATION, as a Subsidiary
Guarantor

By:/s/Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
-----------------
Name: John Wm. Niemand II
Title: Secretary

ALPART JAMAICA INC.,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
---------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
----------------
Name: John Wm. Niemand II
Title: Secretary

KAISER JAMAICA CORPORATION,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
----------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
-----------------
Name: John Wm. Niemand II
Title: Secretary

KAISER FINANCE CORPORATION,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
-----------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
---------------
Name: John Wm. Niemand II
Title: Secretary

KAISER MICROMILL HOLDINGS,
LLC, as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
---------------
Name: John Wm. Niemand II
Title: Secretary

KAISER SIERRA MICROMILLS, LLC,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
-------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
---------------
Name: John Wm. Niemand II
Title: Secretary

KAISER TEXAS SIERRA
MICROMILLS, LLC, as a
Subsidiary Guarantor

By:/s/Karen A. Twitchell
-----------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
---------------
Name: John Wm. Niemand II
Title: Secretary

KAISER TEXAS MICROMILL
HOLDINGS, LLC, as a Subsidiary
Guarantor

By:/s/Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
----------------
Name: John Wm. Niemand II
Title: Secretary

KAISER BELLWOOD CORPORATION,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
----------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
---------------
Name: John Wm. Niemand II
Title: Secretary

FIRST TRUST NATIONAL
ASSOCIATION, as Trustee

By:/s/Kathe Barrett
--------------------------
Name: Kathe Barrett
Title:Trust Officer

Dated: July 15, 1997

Attest: By:/s/Richard H. Prokosch
------------------
Name:Richard H. Prokosch
Title: Assistant
Secretary

- ---------------------------------------------------------------

KAISER ALUMINUM & CHEMICAL CORPORATION, as Issuer,

and

STATE STREET BANK AND TRUST COMPANY, as Trustee

THIRD SUPPLEMENTAL INDENTURE

Dated as of July 15, 1997

INDENTURE

Dated As of February 1, 1993

12-3/4% Senior Subordinated Notes due 2003

- ---------------------------------------------------------------

THIRD SUPPLEMENTAL INDENTURE, dated as of July 15,
1997, among KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware
corporation (the "Company"), as Issuer, KAISER ALUMINA AUSTRALIA
CORPORATION, a Delaware corporation ("KAAC"), ALPART JAMAICA
INC., a Delaware corporation ("AJI"), KAISER JAMAICA CORPORATION,
a Delaware corporation ("KJC"), KAISER FINANCE CORPORATION, a
Delaware corporation ("Kaiser Finance"), KAISER MICROMILL
HOLDINGS, LLC, a Delaware limited liability company ("KMH"),
KAISER SIERRA MICROMILLS, LLC, a Delaware limited liability
company ("KSM"), KAISER TEXAS SIERRA MICROMILLS, LLC, a Texas
limited liability company ("Texas Sierra"), KAISER TEXAS
MICROMILL HOLDINGS, LLC, a Texas limited liability company
("Texas Holdings"), and KAISER BELLWOOD CORPORATION, a Delaware
corporation ("Kaiser Bellwood"), as Subsidiary Guarantors, and
State Street Bank and Trust Company (as successor to The First
National Bank of Boston), a Massachusetts trust company, as
Trustee (the "Trustee").

WHEREAS, the Company, KAAC, AJI, KJC and The First
National Bank of Boston executed an Indenture, dated as of
February 1, 1993 (the "Original Indenture"), in respect of
$400,000,000 aggregate principal amount of the Company's 12-3/4%
Senior Subordinated Notes due 2003 (the "Securities"), and the
Original Indenture was amended by a First Supplemental Indenture,
dated as of May 1, 1993, and by a Second Supplemental Indenture,
dated as of February 1, 1996 (the Original Indenture, as amended
by such First Supplemental Indenture and Second Supplemental
Indenture being hereinafter referred to as the "Indenture"); and

WHEREAS, State Street Bank and Trust Company is the
successor to The First National Bank of Boston, as Trustee under
the Indenture; and

WHEREAS, Section 5.12 of the Indenture requires, under
circumstances specified in Section 5.12, that the Company shall
cause certain Subsidiaries of the Company to execute and deliver
to the Trustee a supplemental indenture in form and substance
satisfactory to the Trustee pursuant to which such Subsidiaries
of the Company shall be named as additional Subsidiary
Guarantors; and

WHEREAS, all conditions and requirements necessary to
make this Third Supplemental Indenture a valid, binding and legal
instrument in accordance with its terms have been performed and
fulfilled and the execution and delivery hereof have been in all
respects duly authorized;

NOW, THEREFORE, in consideration of the above premises,
each party agrees, for the benefit of the other and for the equal
and ratable benefit of the Holders of the Securities, as follows:

ARTICLE I

AMENDMENTS

ARTICLE II

MISCELLANEOUS PROVISIONS

Section 2.1. Terms Defined. For all purposes of this
Third Supplemental Indenture, except as otherwise defined or
unless the context otherwise requires, terms used in capitalized
form in this Third Supplemental Indenture and defined in the
Indenture have the meanings specified in the Indenture.

Section 2.2. Indenture. Except as amended hereby, the
Indenture and the Securities are in all respects ratified and
confirmed and all their terms shall remain in full force and
effect.

Section 2.3. Governing Law. This Third Supplemental
Indenture shall be deemed to be a contract made under the laws of
the State of New York, and for all purposes shall be governed by
and construed in accordance with the laws of said state without
regard to the principles of the conflict of laws provisions
thereof.

Section 2.4. Successors and Assigns. All agreements
of the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas
Sierra, Texas Holdings, and Kaiser Bellwood in this Third
Supplemental Indenture and the Securities shall bind its
successors and assigns.

Section 2.5. Multiple Counterparts. This Third
Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same
instrument.

Section 2.6. Effectiveness. The provisions of this
Third Supplemental Indenture shall become effective immediately
upon its execution and delivery by the Trustee in accordance with
the provisions of Article Eleven of the Indenture.

Section 2.7. Trustee Disclaimer. The Trustee accepts
the amendment of the Indenture effected by this Third
Supplemental Indenture and agrees to execute the trust created by
the Indenture as hereby amended, but only upon the terms and
conditions set forth in the Indenture, including the terms and
provisions defining and limiting the liabilities and
responsibilities of the Trustee, which terms and provisions shall
in like manner define and limit its liabilities and
responsibilities in the performance of the trust created by the
Indenture as hereby amended, and, without limiting the
generality of the foregoing, the Trustee shall not be responsible
in any manner whatsoever for or with respect to any of the
recitals or statements contained herein, all of which recitals or
statements are made solely by the Company, KAAC, AJI, KJC, Kaiser
Finance, KMH, KSM, Texas Sierra, Texas Holdings, and Kaiser
Bellwood, or for or with respect to (i) the validity, efficacy or
sufficiency of this Third Supplemental Indenture or any of the
terms or provisions hereof, (ii) the proper authorization hereof
by the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas
Sierra, Texas Holdings, and Kaiser Bellwood by corporate action
or limited liability company action or otherwise, (iii) the due
execution hereof by the Company, KAAC, AJI, KJC, Kaiser Finance,
KMH, KSM, Texas Sierra, Texas Holdings, and Kaiser Bellwood, or
(iv) the consequences (direct or indirect and whether deliberate
or inadvertent) of any amendment herein provided for, and the
Trustee makes no representation with respect to any such matters.

[Remainder of Page Intentionally Blank]

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused this
Third Supplemental Indenture to be duly executed, all as of the
date first written above.

KAISER ALUMINUM & CHEMICAL
CORPORATION, as Issuer

By:/s/Karen A. Twitchell
-------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
-----------------
Name: John Wm. Niemand II
Title: Secretary

KAISER ALUMINA AUSTRALIA
CORPORATION, as a Subsidiary
Guarantor

By:/s/Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
----------------
Name: John Wm. Niemand II
Title: Secretary

ALPART JAMAICA INC.,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
-----------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
----------------
Name: John Wm. Niemand II
Title: Secretary

KAISER JAMAICA CORPORATION,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
---------------
Name: John Wm. Niemand II
Title: Secretary

KAISER FINANCE CORPORATION,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
-----------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER MICROMILL HOLDINGS,
LLC, as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
-------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
----------------
Name: John Wm. Niemand II
Title: Secretary

KAISER SIERRA MICROMILLS, LLC,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
----------------
Name: John Wm. Niemand II
Title: Secretary

KAISER TEXAS SIERRA
MICROMILLS, LLC, as a
Subsidiary Guarantor

By:/s/Karen A. Twitchell
----------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
----------------
Name: John Wm. Niemand II
Title: Secretary

KAISER TEXAS MICROMILL
HOLDINGS, LLC, as a Subsidiary
Guarantor

By:/s/Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
----------------
Name: John Wm. Niemand II
Title: Secretary

KAISER BELLWOOD CORPORATION,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
-----------------------
Name: Karen A. Twitchell
Title: Treasurer

Dated: July 15, 1997

Attest: By:/s/John Wm. Niemand II
---------------
Name: John Wm. Niemand II
Title: Secretary

STATE STREET BANK AND TRUST
COMPANY, as Trustee

By:/s/James E. Mogavero
------------------------
Name: James E. Mogavero
Title:Assistant Vice
President

Dated: July 15, 1997

Attest: By:/s/ Christina Van Ryzin
Name:Christina Van Ryzin
Title: Assistant
Secretary

- ---------------------------------------------------------------

KAISER ALUMINUM & CHEMICAL CORPORATION, as Issuer,

and

FIRST TRUST NATIONAL ASSOCIATION, as Trustee

SECOND SUPPLEMENTAL INDENTURE

Dated as of July 15, 1997

INDENTURE

Dated As of February 17, 1994

9-7/8% Senior Notes due 2002

- ---------------------------------------------------------------

SECOND SUPPLEMENTAL INDENTURE, dated as of July 15,
1997, among KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware
corporation (the "Company"), as Issuer, KAISER ALUMINA AUSTRALIA
CORPORATION, a Delaware corporation ("KAAC"), ALPART JAMAICA
INC., a Delaware corporation ("AJI"), KAISER JAMAICA CORPORATION,
a Delaware corporation ("KJC"), KAISER FINANCE CORPORATION, a
Delaware corporation ("Kaiser Finance"), KAISER MICROMILL
HOLDINGS, LLC, a Delaware limited liability company ("KMH"),
KAISER SIERRA MICROMILLS, LLC, a Delaware limited liability
company ("KSM"), KAISER TEXAS SIERRA MICROMILLS, LLC, a Texas
limited liability company ("Texas Sierra"), KAISER TEXAS
MICROMILL HOLDINGS, LLC, a Texas limited liability company
("Texas Holdings"), and KAISER BELLWOOD CORPORATION, a Delaware
corporation ("Kaiser Bellwood"), as Subsidiary Guarantors, and
First Trust National Association, a national banking association,
as Trustee (the "Trustee").

WHEREAS, the Company, KAAC, AJI, KJC, Kaiser Finance,
and the Trustee executed an Indenture, dated as of February 17,
1994 (the "Original Indenture"), in respect of $225,000,000
aggregate principal amount of the Company's 9-7/8% Senior Notes
due 2002 (the "Securities"), and the Original Indenture was
amended by a First Supplemental Indenture, dated as of February
1, 1996 (the Original Indenture, as amended by such First
Supplemental Indenture being hereinafter referred to as the
"Indenture"); and

WHEREAS, all conditions and requirements necessary to
make this Second Supplemental Indenture a valid, binding and
legal instrument in accordance with its terms have been performed
and fulfilled and the execution and delivery hereof have been in
all respects duly authorized;

NOW, THEREFORE, in consideration of the above premises,
each party agrees, for the benefit of the other and for the equal
and ratable benefit of the Holders of the Securities, as follows:

ARTICLE I

AMENDMENTS

ARTICLE II

MISCELLANEOUS PROVISIONS

Section 2.1. Terms Defined. For all purposes of this
Second Supplemental Indenture, except as otherwise defined or
unless the context otherwise requires, terms used in capitalized
form in this Second Supplemental Indenture and defined in the
Indenture have the meanings specified in the Indenture.

Section 2.2. Indenture. Except as amended hereby, the
Indenture and the Securities are in all respects ratified and
confirmed and all their terms shall remain in full force and
effect.

Section 2.3. Governing Law. This Second Supplemental
Indenture shall be deemed to be a contract made under the laws of
the State of New York, and for all purposes shall be governed by
and construed in accordance with the laws of said state without
regard to the principles of the conflict of laws provisions
thereof.

Section 2.4. Successors and Assigns. All agreements
of the Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas
Sierra, Texas Holdings, and Kaiser Bellwood in this Second
Supplemental Indenture and the Securities shall bind its
successors and assigns.

Section 2.5. Multiple Counterparts. This Second
Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same
instrument.

Section 2.6. Effectiveness. The provisions of this
Second Supplemental Indenture shall become effective immediately
upon its execution and delivery by the Trustee in accordance with
the provisions of Article Ten of the Indenture.

Section 2.7. Trustee Disclaimer. The Trustee accepts
the amendment of the Indenture effected by this Second
Supplemental Indenture and agrees to execute the trust created by
the Indenture as hereby amended, but only upon the terms and
conditions set forth in the Indenture, including the terms and
provisions defining and limiting the liabilities and
responsibilities of the Trustee, which terms and provisions shall
in like manner define and limit its liabilities and
responsibilities in the performance of the trust created by the
Indenture as hereby amended, and, without limiting the generality
of the foregoing, the Trustee shall not be responsible in any
manner whatsoever for or with respect to any of the recitals or
statements contained herein, all of which recitals or statements
are made solely by the Company, KAAC, AJI, KJC, Kaiser Finance,
KMH, KSM, Texas Sierra, Texas Holdings, and Kaiser Bellwood, or
for or with respect to (i) the validity, efficacy or sufficiency
of this Second Supplemental Indenture or any of the terms or
provisions hereof, (ii) the proper authorization hereof by the
Company, KAAC, AJI, KJC, Kaiser Finance, KMH, KSM, Texas Sierra,
Texas Holdings, and Kaiser Bellwood by corporate action or
limited liability company action or otherwise, (iii) the due
execution hereof by the Company, KAAC, AJI, KJC, Kaiser Finance,
KMH, KSM, Texas Sierra, Texas Holdings, and Kaiser Bellwood, or
(iv) the consequences (direct or indirect and whether deliberate
or inadvertent) of any amendment herein provided for, and the
Trustee makes no representation with respect to any such matters.

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused this
Second Supplemental Indenture to be duly executed, all as of the
date first written above.

KAISER ALUMINUM & CHEMICAL
CORPORATION, as Issuer

By:/s/Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Dated: July 15, 1997 Title: Treasurer

Attest: By:/s/John Wm. Niemand II
--------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER ALUMINA AUSTRALIA
CORPORATION, as a
Subsidiary Guarantor

By:/s/Karen A. Twitchell
---------------------
Name: Karen A. Twitchell
Dated: July 15, 1997 Title: Treasurer

Attest: By:/s/John Wm. Niemand II
--------------------
Name: John Wm. Niemand II
Title: Secretary

ALPART JAMAICA INC.,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Dated: July 15, 1997 Title: Treasurer

Attest: By:/s/John Wm. Niemand II
-------------------
Name: John Wm. Niemand II
Title: Secretary

SIGNATURES

KAISER JAMAICA CORPORATION,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Dated: July 15, 1997 Title: Treasurer

Attest: By:/s/John Wm. Niemand II
---------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER FINANCE CORPORATION,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
-------------------------
Name: Karen A. Twitchell
Dated: July 15, 1997 Title: Treasurer

Attest: By:/s/John Wm. Niemand II
--------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER MICROMILL HOLDINGS,
LLC, as a Subsidiary
Guarantor

By:/s/Karen A. Twitchell
-----------------------
Name: Karen A. Twitchell
Dated: July 15, 1997 Title: Treasurer

Attest: By:/s/John Wm. Niemand II
----------------------
Name: John Wm. Niemand II
Title: Secretary

SIGNATURES

KAISER SIERRA MICROMILLS, LLC,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
-------------------------
Name: Karen A. Twitchell
Dated: July 15, 1997 Title: Treasurer

Attest: By:/s/John Wm. Niemand II
----------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER TEXAS SIERRA
MICROMILLS, LLC, as a
Subsidiary Guarantor

By:/s/Karen A. Twitchell
----------------------
Name: Karen A. Twitchell
Dated: July 15, 1997 Title: Treasurer

Attest: By:/s/John Wm. Niemand II
--------------------
Name: John Wm. Niemand II
Title: Secretary

KAISER TEXAS MICROMILL
HOLDINGS, LLC, as a
Subsidiary Guarantor

By:/s/Karen A. Twitchell
----------------------
Name: Karen A. Twitchell
Dated: July 15, 1997 Title: Treasurer

Attest: By:/s/John Wm. Niemand II
---------------------
Name: John Wm. Niemand II
Title: Secretary

SIGNATURES

KAISER BELLWOOD CORPORATION,
as a Subsidiary Guarantor

By:/s/Karen A. Twitchell
------------------------
Name: Karen A. Twitchell
Dated: July 15, 1997 Title: Treasurer

Attest: By:/s/John Wm. Niemand II
---------------------
Name: John Wm. Niemand II
Title: Secretary

FIRST TRUST NATIONAL
ASSOCIATION, as Trustee

By:/s/Richard H. Prokosch
-----------------------
Name:Richard H. Prokosch
Dated: July 15, 1997
Title: Trust Officer

Attest: By:/s/Kathe Barrett
----------------------
Name: Kathe Barrett
Title: Assistant Secretary

EXECUTION COPY

TENTH AMENDMENT TO CREDIT AGREEMENT AND ASSIGNMENT
--------------------------------------------------

THIS TENTH AMENDMENT TO CREDIT AGREEMENT AND ASSIGNMENT
(this "Amendment"), dated as of June 25, 1997, is by and among
---------
KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware corporation
(the "Company"), KAISER ALUMINUM CORPORATION, a Delaware
-------
corporation (the "Parent Guarantor"), the various financial
-----------------
institutions that are or may from time to time become parties to
the Credit Agreement referred to below (collectively, the
"Lenders" and, individually, a "Lender"), and BANKAMERICA
------- -------
BUSINESS CREDIT, INC., a Delaware corporation, as agent (in such
capacity, together with its successors and assigns in such
capacity, the "Agent") for the Lenders. Capitalized terms used,
-----
but not defined, herein shall have the meanings given to such
terms in the Credit Agreement, as amended hereby.

W I T N E S S E T H:

WHEREAS, the Company, the Parent Guarantor, the Lenders
and the Agent are parties to the Credit Agreement, dated as of
February 15, 1994, as amended by the First Amendment to Credit
Agreement dated as of July 21, 1994, the Second Amendment to
Credit Agreement, dated as of March 10, 1995, the Third Amendment
to Credit Agreement and Acknowledgement, dated as of July 20,
1995, the Fourth Amendment to Credit Agreement, dated as of
October 17, 1995, the Fifth Amendment to Credit Agreement, dated
as of December 11, 1995, the Sixth Amendment to Credit Agreement,
dated as of October 1, 1996, the Seventh Amendment to Credit
Agreement, dated as of December 17, 1996, the Eighth Amendment to
Credit Agreement, dated as of February 24, 1997, and the Ninth
Amendment to Credit Agreement, dated as of April 21, 1997 (the
"Credit Agreement");
----------------

WHEREAS, National Westminster Bank, PLC, a Lender (the
"Assigning Lender"), wishes to assign to the Lenders its
----------------
outstanding Credit Extensions and Commitments under the Credit
Agreement as of the date hereof; and

WHEREAS, the Company has requested that Lenders amend
certain provisions of the Credit Agreement in order to permit,
among other things, the acquisition by a Subsidiary of the
Company of the Bellwood extrusion plant and related assets;

NOW, THEREFORE, the parties hereto agree as follows:

Section 1. Amendments to Credit Agreement.
------------------------------

A. Amendments to Article I: Definitions.
-------------------------------------

1. Section 1.1 of the Credit Agreement is hereby
------------
amended by adding the following definition in the appropriate
alphabetical order:

"Kaiser Bellwood" means Kaiser Bellwood Corporation, a
----------------
corporation organized under the laws of Delaware."

2. The definition of "Borrowing Base" contained in
---------------
Section 1.1 of the Credit Agreement is hereby amended by (i)
- -----------
adding the phrase ", Kaiser Bellwood" after the word "Company"
the first time it appears in clause (c) thereof; and (ii) adding
----------
the phrase "and Kaiser Bellwood" after the word "Company" each
time it appears in clause (ii) of the first proviso contained
------------
therein and in the second proviso contained therein.

3. The definition of "Eligible Account" contained in
-----------------
Section 1.1 of the Credit Agreement is hereby amended by (i)
- -----------
adding the phrase ", Kaiser Bellwood" after the word "Company"
the first time it appears therein, in clause (a) thereof and in
----------
clauses (g), (i), (n) and (t) thereof; (ii) adding the phrase ",
- ------- ---- ---- --- ----
Kaiser Bellwood's" after the phrase "Company's" in clause (a)
----------
thereof; and (iii) adding the phrase "or Kaiser Bellwood" after
the word "Company" each time it appears in clause (c) thereof.
-----------

4. The definition of "Eligible Inventory" contained
-------------------
in Section 1.1 of the Credit Agreement is hereby amended by (i)
------------
adding the phrase "or Kaiser Bellwood" after the word "Company"
the first time it appears therein, in clause (b) thereof and in
----------
clause (d) thereof; and (ii) adding the phrase "or Kaiser
- ----------
Bellwood's" after the word "Company's" the first time it appears
therein and in clause (b) thereof.
----------

5. The definition of "Inventory" contained in Section
--------- --------
1.1 of the Credit Agreement is hereby amended by adding the
- ----
phrase "or Kaiser Bellwood's" after the word "Company's" therein.

6. The definition of "Product Swap" contained in
------------
Section 1.1 of the Credit Agreement is hereby amended by adding
- -----------
the phrase ", Kaiser Bellwood" after the word "Company" each time
it appears therein.

7. The definition of "Progress Billing" contained in
----------------
Section 1.1 of the Credit Agreement is hereby amended by adding
- -----------
the phrase ", Kaiser Bellwood" after the word "Company" therein.

8. The definition of "Tolling Inventory" contained in
------------------
Section 1.1 of the Credit Agreement is hereby amended by adding
- -----------
the phrase "or Kaiser Bellwood" after the word "Company" each
time it appears therein.

B. Amendments to Article II: Commitments and Borrowing
-----------------------------------------------------
Procedures.
- ----------

1. Section 2.1.4 of the Credit Agreement is hereby
--------------
amended by (i) adding the phrase ", Kaiser Bellwood" after the
word "Company" the second and fourth time it appears in the final
paragraph thereof; and (ii) adding the phrase "and Kaiser
Bellwood" after the word "Company" the third time it appears in
the final paragraph thereof.

C. Amendments to Article IX: Covenants.
------------------------------------

1. Section 9.1.5 of the Credit Agreement is hereby
-------------
amended by (i) adding the phrase "and Kaiser Bellwood" after the
word "KAII" in the second sentence of clause (a) thereof and the
second time it appears in clause (b) thereof; (ii) adding the
----------
phrase ", Kaiser Bellwood's" after the word "Company's" the
first, second, third, fourth, sixth and seventh times it appears
in clause (b) thereof; (iii) adding the phrase "Kaiser Bellwood,"
----------
after the phrase "Company," the second time it appears in clause
-------
(b) thereof; and (iv) adding the phrase ", Kaiser Bellwood" after
- ---
the word "Company" the fourth and fifth times it appears in
clause (b) thereof.
- ----------

2. Section 9.1.9 of the Credit Agreement is hereby
--------------
amended by (i) adding the phrase "and Kaiser Bellwood" after the
word "KAII" each time it appears therein and after the word
"Company" in the first clauses (d) and (e) thereof and the second
------------ ----
clause (c) thereof; and (ii) adding the phrase ", Kaiser
- ----------
Bellwood's" after the word "Company's" contained therein.

3. Clause (b)(i) of Section 9.2.2 of the Credit
------------- -------------
Agreement is hereby amended to read in its entirety as follows:

"(i) Indebtedness of the Company in respect of (A)
the Senior Debt, (B) the New Senior Debt, provided that (1)
--------
the aggregate principal amount thereof does not exceed
$200,000,000, (2) such Indebtedness is unsecured, (3) such
Indebtedness is issued on or prior to February 1, 1997, (4)
such Indebtedness does not mature prior to February 15, 2002
and (5) the New Senior Indenture is substantially in the
form of the Senior Indenture and (C) the Additional New
Senior Debt, provided that (1) the aggregate principal
--------
amount thereof does not exceed $50,000,000, (2) such
Indebtedness is unsecured, (3) such Indebtedness is issued
on or prior to March 1, 1997, (4) such Indebtedness does not
mature prior to February 15, 2002 and (5) the Additional New
Senior Indentures are substantially in the form of the New
Senior Indenture; and Contingent Obligations of AJI, KJC,
KFC, KAAC, KMH, KSM, Texas Holdings, Texas Sierra and Kaiser
Bellwood as a 'Subsidiary Guarantor'
(under and as defined in the Senior Indenture, the New
Senior Indenture, the Additional New Senior Indentures and
the Subordinated Indenture) in respect of the Senior Debt,
the New Senior Debt, the Additional New Senior Debt and the
Subordinated Debt, respectively;"

4. Section 9.2.2 of the Credit Agreement is hereby
-------------
amended by adding the phrase ", Kaiser Bellwood" after the term
"KJC" in clause (b)(xi) therein.

5. Section 9.2.2 of the Credit Agreement is hereby
-------------
further amended by adding the following to the end of clause
-------
(b)(xvii) thereof:
- ---------

"; and provided, further, that Indebtedness of Kaiser
--------- --------
Bellwood incurred pursuant to this Section 9.2.2(b)(xvii) shall
----------------------
not exceed $10,000,000 at any time outstanding and shall be
incurred solely for the purpose of making Capital Expenditures"

6. Clause (c) of Section 9.2.13 of the Credit
---------- --------------
Agreement is hereby amended by adding the phrase "Kaiser
Bellwood," after the phrase "Texas Sierra," in the parenthetical
contained therein.

D. Amendments to Signature Pages.
-----------------------------

The Credit Agreement is hereby amended to delete the
Assigning Lender as a Lender thereunder. Subject to the last
paragraph of this Section D, the Percentages set forth opposite
the Lenders' names on the signature pages of the Credit Agreement
are hereby amended to read as follows:

BankAmerica Business Credit, Inc. 29.011%
Congress Financial Corporation 27.768%
La Salle National Bank 05.231%
CIT Group/Business Credit, Inc. 06.769%
Transamerica Business Credit Corporation 07.362%
Bank of America National Trust and
Savings Association 09.090%
Heller Financial, Inc. 09.538%
ABN Amro N.V. 05.231%

Subject to the last paragraph of this Section D, the
Agent is hereby directed to pay all interest and fees accrued to
and excluding the Tenth Amendment Effective Date (as defined
below) on the Assigned Portion (as defined below) to the
Assigning Lender and to pay all interest and fees accrued from
and including the Tenth Amendment Effective Date on the Assigned
Portion to the Lenders in accordance with their respective shares
of the Assigned Portion.

Effective on the Tenth Amendment Effective Date and
notwithstanding anything to the contrary contained in Section 5.4
------------
of the Credit Agreement, each Lender shall be deemed to hold an
undivided interest and participation, to the extent of such
Lender's Percentage as reflected above, in all Letters of Credit
and the Company's Reimbursement Obligations with respect thereto
outstanding as of such date.

Subject to the last paragraph of this Section D, on the
Tenth Amendment Effective Date each Lender whose Percentage is
increased pursuant to this Amendment shall make a payment to the
Agent in a amount equal to the amount of such increase multiplied
by the amount of all then outstanding Loans, and the Agent shall
distribute such payments to the Assigning Lender.

Anything contained in this Agreement or the other Loan
Documents to the contrary notwithstanding, each Lender's
Percentage interest in any LIBO Rate Loan outstanding on the
Tenth Amendment Effective Date shall remain unchanged for all
purposes under the Loan Documents until the date of expiration of
the Interest Period in effect as of the Tenth Amendment Effective
Date with respect to such LIBO Rate Loan, at which time (i) all
payments of interest and principal, if any, made on such date in
respect of such LIBO Rate Loan shall be distributed to Lenders in
accordance with such unchanged Percentages and (ii) in the event
such LIBO Rate Loan is to remain outstanding for an additional
Interest Period commencing on such date or is to be converted to
a Reference Rate Loan on such date, Lenders shall make such
payments, and the Agent shall distribute such payments to the
Assigning Lender, on such date.

Section 2. Assignment.
-----------

Subject to the last paragraph of Section D above, the
Assigning Lender hereby assigns, delegates, transfers, conveys
and delivers, and the Lenders agree to accept the assignment,
delegation, transfer, conveyance and delivery of, all of the
Assigning Lender's right, title and interest in and to the
Assigning Lender's outstanding Credit Extensions and Commitments
under the Credit Agreement as of the Tenth Amendment Effective
Date (the "Assigned Portion"). Subject to the last paragraph of
-----------------
Section D above, the Assigning Lender hereby acknowledges that,
from and after the Tenth Amendment Effective Date, the Assigning
Lender is no longer a Lender for purposes of the Credit Agreement
and, other than as set forth in Section 12.5 of the Credit
-------------
Agreement, the rights and obligations of the Assigning Lender
under the Credit Agreement are terminated. The Assigning Lender
shall pay to the Agent a processing fee in the amount of $3,500
pursuant to subsection 12.11.1 of the Credit Agreement.

Section 3. Supplements to Collateral Documents.
------------------------------------

The parties agree that, as of the Tenth Amendment
Effective Date, (i) the Subsidiary Security Agreement shall be
supplemented as set forth in Exhibit A hereto, (ii) the
Subsidiary Guaranty shall be supplemented as set forth in
Exhibit B hereto, and (iii) the Subsidiary Pledge Agreement shall
be supplemented as set forth in Exhibit C hereto. The Required
Lenders hereby approve the forms of such supplements, and hereby
authorize the Agent on their behalf to accept from Kaiser
Bellwood and authorize the Agent to execute and deliver as Agent
such supplements in substantially the forms of such Exhibits A, B
and C with such changes, additions or deletions as the Agent, in
its sole and absolute discretion, may approve.

Section 4. Consent of Lenders.
-------------------

The Lenders hereby consent to the execution and
delivery of a supplement to the Senior Indenture, a supplement to
the New Senior Indenture, a supplement to the Additional New
Senior Indentures and a supplement to the Subordinated Indenture,
in form and substance satisfactory to the Agent in its sole and
absolute discretion, for the purpose of adding Kaiser Bellwood
as a "Subsidiary Guarantor" (under and as defined in the Senior
Indenture, New Senior Indenture, Additional New Senior Indentures
and Subordinated Indenture).

Section 5. Conditions to Effectiveness.
----------------------------

This Amendment shall become effective as of the date
hereof only when the following conditions shall have been
satisfied and notice thereof shall have been given by the Agent
to the Parent Guarantor, the Company and each Lender (the date of
satisfaction of such conditions and the giving of such notice
being referred to herein as the "Tenth Amendment Effective
--------------------------
Date"):
- -----

A. The Agent shall have received for each Lender
counterparts hereof duly executed on behalf of the Parent
Guarantor, the Company, the Agent and the Required Lenders (or
notice of the approval of this Amendment by the Required Lenders
satisfactory to the Agent shall have been received by the Agent),
together with a Pledge Amendment to the Company Pledge Agreement,
dated as of June 25, 1997, with respect to the stock of Kaiser
Bellwood (the "Pledge Amendment") duly executed on behalf of the
-----------------
Company.

B. The Agent shall have received:

1. Resolutions of the Board of Directors or of
the Executive Committee of the Board of Directors of the Company
and the Parent Guarantor approving and authorizing the execution,
delivery and performance of this Amendment, and, as to the
Company, the Pledge Amendment, certified by their respective
corporate secretaries or an assistant secretary as being in full
force and effect without modification or amendment as of the date
of execution hereof by the Company or the Parent Guarantor, as
the case may be.

2. A signature and incumbency certificate of the
officers of the Company and the Parent Guarantor executing this
Amendment, and, as to the Company, the Pledge Amendment.

3. Copies of the Intercompany Demand Note issued
in favor of KFC by Kaiser Bellwood (the "New Intercompany Demand
------------------------
Note"), in substantially the form of Exhibit O-4 to the Credit
- ----- ------------
Agreement, with such changes, additions and deletions as the
Agent shall approve in its sole and absolute discretion.

4. Copies of the Supplement to Subsidiary
Security Agreement, dated as of June 25, 1997, between Kaiser
Bellwood and the Agent (the "Subsidiary Security Supplement")
-------------------------------
duly executed on behalf of Kaiser Bellwood and the Agent.

5. Copies of the Supplement to Subsidiary
Guaranty, dated as of June 25, 1997, by and between Kaiser
Bellwood and the Agent (the "Subsidiary Guaranty Supplement")
-------------------------------
duly executed on behalf of Kaiser Bellwood and the Agent.

6. Copies of the Supplement to Subsidiary Pledge
Agreement, dated as of June 25, 1997, by and between Kaiser
Bellwood and the Agent (the "Subsidiary Pledge Supplement") duly
-----------------------------
executed on behalf of Kaiser Bellwood and the Agent.

7. Certified copies of the Certificate of
Incorporation of Kaiser Bellwood.

8. Copies of the Bylaws of Kaiser Bellwood,
certified as of the date of delivery to the Agent by its
corporate secretary or an assistant secretary or other authorized
representative.

9. Resolutions of the Board of Directors of
Kaiser Bellwood approving and authorizing the execution, delivery
and performance of the Subsidiary Guaranty Supplement, the
Subsidiary Pledge Supplement, the Subsidiary Security Supplement
and the New Intercompany Demand Note, certified by its corporate
secretary or an assistant secretary as being in full force and
effect without modification or amendment as of the date of
execution thereof by Kaiser Bellwood.

10. A signature and incumbency certificate of the
officers of Kaiser Bellwood executing the Subsidiary Guaranty
Supplement, the Subsidiary Pledge Supplement, the Subsidiary
Security Supplement and the New Intercompany Demand Note.

11. Duly executed financing statements (Form
UCC-1) naming Kaiser Bellwood as the debtor and the Agent as the
secured party, or other similar instruments or documents,
suitable for filing under the Uniform Commercial Code of all
jurisdictions as may be necessary or, in the reasonable opinion
of the Agent, desirable to perfect the security interest of the
Agent in the Collateral granted pursuant to the Subsidiary
Security Agreement to the extent that perfection may be
accomplished by filing under the Uniform Commercial Code in any
state in the United States or the District of Columbia.

12. Stock certificates evidencing 100% of the
issued and outstanding shares of capital stock of Kaiser
Bellwood, accompanied by undated stock powers duly executed in
blank.

13. Copies of a Pledge Amendment to the
Subsidiary Pledge Agreement, dated as of June 25, 1997, with
respect to the New Intercompany Demand Note (the "Subsidiary
-----------
Pledge Amendment") duly executed on behalf of KFC.
- ----------------

14. Resolutions of the Board of Directors of KFC
approving and authorizing the execution, delivery and performance
of the Subsidiary Pledge Amendment, certified by its corporate
secretary or an assistant secretary as being in full force and
effect without modification or amendment as of the date of
execution thereof by KFC.

15. A signature and incumbency certificate of the
officers or other authorized representative of KFC executing the
Subsidiary Pledge Amendment.

C. The Agent shall have received for each Lender an
opinion, addressed to the Agent and each Lender, from Kramer,
Levin, Naftalis & Frankel, in form and substance satisfactory to
the Agent.

Section 6. Assigning Lender's Representation and
--------------------------------------
Warranty.
- ---------

In order to induce the Company, Lenders and the Agent
to enter into this Amendment and to amend the Credit Agreement
and the other Loan Documents in the manner provided herein, the
Assigning Lender represents and warrants to the Company, each
Lender and the Agent that, prior to the Tenth Amendment Effective
Date, the Assigning Lender has not assigned, delegated,
transferred, conveyed or delivered any part of the Assigned
Portion.

Section 7. Company's Representations and Warranties.
-----------------------------------------

In order to induce the Lenders and the Agent to enter
into this Amendment and to amend the Credit Agreement and the
other Loan Documents in the manner provided herein, the Parent
Guarantor and the Company represent and warrant to each Lender
and the Agent that, as of the Tenth Amendment Effective Date after giving
effect to the effectiveness of this Amendment, the following
statements are true and correct in all material respects:

A. Authorization of Agreements. The execution and
----------------------------
delivery of this Amendment by the Company and the Parent
Guarantor and the performance of the Credit Agreement as amended
by this Amendment (the "Amended Agreement") by the Company and
------------------
the Parent Guarantor are within such Obligor's corporate powers
and have been duly authorized by all necessary corporate action
on the part of the Company and the Parent Guarantor, as the case
may be.

B. No Conflict. The execution and delivery by the
------------
Company and the Parent Guarantor of this Amendment and the
performance by the Company and the Parent Guarantor of the
Amended Agreement do not:

1. contravene such Obligor's Organic Documents;

2. contravene the Senior Indenture, the New
Senior Indenture, the Additional New Senior Indentures or the
Subordinated Indenture or contravene any other contractual
restriction where such a contravention has a reasonable
possibility of having a Materially Adverse Effect or contravene
any law or governmental regulation or court decree or order
binding on or affecting such Obligor or any of its Subsidiaries;
or

3. result in, or require the creation or
imposition of, any Lien on any of such Obligor's properties or
any of the properties of any Subsidiary of such Obligor, other
than pursuant to the Loan Documents.

C. Binding Obligation. This Amendment has been duly
-------------------
executed and delivered by the Company and the Parent Guarantor
and this Amendment and the Amended Agreement constitute the
legal, valid and binding obligations of the Company and the
Parent Guarantor, enforceable against the Company and the Parent
Guarantor in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors'
rights generally and by general principles of equity.

D. Governmental Approval, Regulation, etc. No
---------------------------------------
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or any
other Person is required for the due execution, delivery or
performance of this Amendment by the Company or the Parent
Guarantor.

E. Incorporation of Representations and Warranties
------------------------------------------------
from Credit Agreement. Each of the statements set forth in
- ----------------------
Section 7.2.1 of the Credit Agreement is true and correct.
- -------------

Section 8. Acknowledgement and Consent.
---------------------------

The Company is a party to the Company Collateral
Documents, in each case as amended through the date hereof,
pursuant to which the Company has created Liens in favor of the
Agent on certain Collateral to secure the Obligations. The
Parent Guarantor is a party to the Parent Collateral Documents,
in each case as amended through the date hereof, pursuant to
which the Parent Guarantor has created Liens in favor of the
Agent on certain Collateral and pledged certain Collateral to the
Agent to secure the Obligations of the Parent Guarantor. Certain
Subsidiaries of the Company are parties to the Subsidiary
Guaranty and/or one or more of the Subsidiary Collateral
Documents, in each case as amended through the date hereof,
pursuant to which such Subsidiaries have (i) guarantied the
Obligations and/or (ii) created Liens in favor of the Agent on
certain Collateral. The Company, the Parent Guarantor and such
Subsidiaries are collectively referred to herein as the "Credit
-------
Support Parties", and the Company Collateral Documents, the
- ----------------
Parent Collateral Documents, the Subsidiary Guaranty and the
Subsidiary Collateral Documents are collectively referred to
herein as the "Credit Support Documents".
-------------------------

Each Credit Support Party hereby acknowledges that it
has reviewed the terms and provisions of the Credit Agreement as
amended by this Amendment and consents to the amendment of the
Credit Agreement effected as of the date hereof pursuant to this
Amendment and the amendment of the other Loan Documents effected
as of the date hereof.

Each Credit Support Party acknowledges and agrees that
any of the Credit Support Documents to which it is a party or
otherwise bound shall continue in full force and effect. Each
Credit Support Party hereby confirms that each Credit Support
Document to which it is a party or otherwise bound and all
Collateral encumbered thereby will continue to guaranty or
secure, as the case may be, the payment and performance of all
obligations guaranteed or secured thereby, as the case may be.

Each Credit Support Party (other than the Company and
the Parent Guarantor) acknowledges and agrees that (i)
notwithstanding the conditions to effectiveness set forth in this
Amendment, such Credit Support Party is not required by the terms
of the Credit Agreement or any other Loan Document to consent to
the amendments to the Credit Agreement effected pursuant to this
Amendment and (ii) nothing in the Credit Agreement, this
Amendment or any other Loan Document shall be deemed to require
the consent of such Credit Support Party to any future amendments
to the Credit Agreement.

Section 9. Miscellaneous.
--------------

A. Reference to and Effect on the Credit Agreement
------------------------------------------------
and the Other Loan Documents.
-----------------------------

1. On and after the Tenth Amendment Effective
Date, each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import referring
to the Credit Agreement, and each reference in the other Loan
Documents to the "Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement shall mean
and be a reference to the Amended Agreement.

2. Except as specifically amended by this
Amendment and the amendments to the other Loan Documents executed
as of the date hereof, the Credit Agreement and the other Loan
Documents shall remain in full force and effect and are hereby
ratified and confirmed.

B. Applicable Law. THIS AMENDMENT SHALL BE DEEMED TO
---------------
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO SUCH LAWS RELATING TO
CONFLICTS OF LAWS.

C. Headings. The various headings of this Amendment
---------
are inserted for convenience only and shall not affect the
meaning or interpretation of this Amendment or any provision
hereof.

D. Counterparts. This Amendment may be executed by
-------------
the parties hereto in several counterparts and by the different
parties on separate counterparts, each of which shall be deemed
to be an original and all of which shall constitute together but
one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached
to the same document.

E. Severability. Any provision of this Amendment
-------------
which is prohibited or unenforceable in any jurisdiction shall,
as to such provision and such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Amendment or
affecting the validity or enforceability of such provisions in
any other jurisdiction.

IN WITNESS WHEREOF, this Amendment has been duly
executed and delivered as of the day and year first above
written.

KAISER ALUMINUM CORPORATION KAISER ALUMINUM & CHEMICAL
CORPORATION

By:/s/Karen A. Twitchell By:/s/Karen A. Twitchell
---------------------- ------------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

BANKAMERICA BUSINESS CREDIT, INC. BANKAMERICA BUSINESS CREDIT,INC., as Agent

By:/s/Michael J. Jasaitis By:/s/Michael J. Jasaitis
---------------------- ------------------------
Name Printed: Michael J. Jasaitis Name Printed: Michael J. Jasaitis
Its: Vice President Its: Vice President

BANK OF AMERICA NATIONAL THE CIT GROUP/BUSINESS
TRUST AND SAVINGS ASSOCIATION CREDIT, INC.

By:/s/James P. Johnson By:/s/Timothy S. Culver
------------------ -----------------------
Name Printed:James P. Johnson Name Printed:Timothy S. Culver
Its: Managing Director Its: Assistant Vice President

CONGRESS FINANCIAL CORPORATION HELLER FINANCIAL, INC.
(WESTERN)

By:/s/Kristine Metchikian By:/s/Tara Hopkins
-------------------------- -----------------------
Name Printed:Kristine Metchikian Name Printed: Tara Hopkins
Its: Vice President Its: Assistant Vice President

LA SALLE NATIONAL BANK NATIONAL WESTMINSTER BANK
PLC

By:/s/Douglas C. Collath By:/s/Ian M. Plester
---------------------- ----------------------
Name Printed: Douglas C. Collath Name Printed:Ian M. Plester
Its: First Vice President Its: Vice President

TRANSAMERICA BUSINESS CREDIT ABN AMRO BANK N.V.
CORPORATION

By:/s/Matthew N. McAlpine By: /s/L.T. Osborne
---------------------- ----------------------
Name Printed:Matthew N. McAlpine Name Printed:L.T. Osborne
Its: Vice President Its: Group Vice President

ACKNOWLEDGED AND AGREED TO:

AKRON HOLDING CORPORATION KAISER ALUMINUM & CHEMICAL
INVESTMENT, INC.

By:/s/Karen A. Twitchell By:/s/Karen A. Twitchell
---------------------- ------------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

KAISER ALUMINUM PROPERTIES, INC. KAISER ALUMINUM TECHNICAL
SERVICES, INC.

By:/s/Karen A. Twitchell By:/s/Karen A. Twitchell
---------------------- ------------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

OXNARD FORGE DIE COMPANY, INC. KAISER ALUMINIUM
INTERNATIONAL, INC.

By:/s/Karen A. Twitchell By:/s/Karen A. Twitchell
---------------------- ------------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

KAISER ALUMINA AUSTRALIA KAISER FINANCE CORPORATION
CORPORATION

By:/s/Karen A. Twitchell By:/s/Karen A. Twitchell
---------------------- ----------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

ALPART JAMAICA INC. KAISER JAMAICA CORPORATION

By:/s/Karen A. Twitchell By:/s/Karen A. Twitchell
---------------------- ----------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

KAISER BAUXITE COMPANY KAISER EXPORT COMPANY

By:/s/Karen A. Twitchell By:/s/Karen A. Twitchell
---------------------- ------------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

KAISER MICROMILL HOLDINGS, LLC KAISER SIERRA MICROMILLS, LLC

By:/s/Karen A. Twitchell By:/s/Karen A. Twitchell
---------------------- ------------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

KAISER TEXAS SIERRA MICROMILLS, KAISER TEXAS MICROMILL
LLC HOLDINGS, LLC

By:/s/Karen A. Twitchell By:/s/Karen A. Twitchell
---------------------- ------------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

EXHIBIT A

SUPPLEMENT TO SUBSIDIARY SECURITY AGREEMENT
--------------------------------------------

THIS SUPPLEMENT TO SUBSIDIARY SECURITY AGREEMENT (this
"Supplement"), dated as of June 25, 1997, is by and between
----------
Kaiser Bellwood Corporation, a Delaware corporation, (the "New
----
Kaiser Subsidiary"), and BankAmerica Business Credit, Inc., a
- -----------------
Delaware corporation, as agent for the Secured Lenders (as
defined in the Credit Agreement referred to below) (in such
capacity, together with its successors and assigns in such
capacity, the "Agent"). Capitalized terms used, but not defined,
-----
herein shall have the meanings given to such terms in the Credit
Agreement, as amended by the Tenth Amendment.

W I T N E S S E T H:

WHEREAS, Kaiser Aluminum & Chemical Corporation, a
Delaware corporation (the "Company"), Kaiser Aluminum
--------
Corporation, a Delaware corporation (the "Parent Guarantor"), the
----------------
various financial institutions that are or may from time to time
become parties to the Credit Agreement (collectively, the
"Lenders" and, individually, a "Lender"), and the Agent are
-------- -------
parties to the Credit Agreement, dated as of February 15, 1994,
as amended by the First Amendment to Credit Agreement, dated as
of July 21, 1994, the Second Amendment to Credit Agreement, dated
as of March 10, 1995, the Third Amendment to Credit Agreement and
Acknowledgment, dated as of July 20, 1995, the Fourth Amendment
to Credit Agreement, dated as of October 17, 1995, the Fifth
Amendment to Credit Agreement, dated as of December 11, 1995, the
Sixth Amendment to Credit Agreement, dated as of October 1, 1996,
the Seventh Amendment to Credit Agreement, dated as of December
17, 1996, the Eighth Amendment to Credit Agreement, dated as of
February 24, 1997, and the Ninth Amendment to Credit Agreement,
dated as of April 21, 1997 (the "Credit Agreement"); and
-----------------

WHEREAS, as of the date hereof the Company, the Parent
Guarantor, the Lenders and the Agent are entering into a Tenth
Amendment to Credit Agreement (the "Tenth Amendment"); and
---------------

WHEREAS, the New Kaiser Subsidiary is required as a
condition to the effectiveness of the Tenth Amendment to execute
this Supplement; and

WHEREAS, the Required Lenders have consented to the
execution and delivery of this Supplement by the Agent;

NOW, THEREFORE, the parties hereto agree as follows:

Section 1. Addition of New Kaiser Subsidiary.
----------------------------------

On and after the Tenth Amendment Effective Date (as
defined in the Tenth Amendment), the New Kaiser Subsidiary shall
be a party to the Subsidiary Security Agreement and the terms
"Kaiser Subsidiary" and "Kaiser Subsidiaries" (as used in the
Subsidiary Security Agreement) shall include and also be a
reference to the New Kaiser Subsidiary. Schedules I through VI
of the Subsidiary Security Agreement are hereby supplemented to
include the information set forth on Schedules I through VI
hereto with respect to the New Kaiser Subsidiary.

Section 2. Kaiser Subsidiary's Representations and
----------------------------------------
Warranties.
- -----------

In order to induce the Agent to enter into this
Supplement and to supplement the Subsidiary Security Agreement in
the manner provided herein, and to induce the Required Lenders to
consent to such action by the Agent, the New Kaiser Subsidiary
represents and warrants as a Kaiser Subsidiary to each Lender and
the Agent that, as of the Tenth Amendment Effective Date after
giving effect to the effectiveness of this Supplement, the
following statements are true and correct in all material
respects:

A. Authorization of Agreements. The execution and
----------------------------
delivery of this Supplement by such Kaiser Subsidiary and the
performance of the Subsidiary Security Agreement as supplemented
by this Supplement (the "Supplemented Agreement") by such Kaiser
-----------------------
Subsidiary are within such Kaiser Subsidiary's corporate powers
and have been duly authorized by all necessary corporate action
on the part of such Kaiser Subsidiary.

B. No Conflict. The execution and delivery by such
------------
Kaiser Subsidiary of this Supplement and the performance by such
Kaiser Subsidiary of the Supplemented Agreement do not:

(1) contravene such Kaiser Subsidiary's Organic
Documents;

(2) contravene the Senior Indenture, the New
Senior Indenture, the Additional New Senior Indentures or the
Subordinated Indenture or contravene any other contractual
restriction where such a contravention has a reasonable
possibility of having a Materially Adverse Effect or contravene
any law or governmental regulation or court decree or order
binding on or affecting such Kaiser Subsidiary or any of its
Subsidiaries; or

(3) result in, or require the creation or
imposition of, any Lien on any of such Kaiser Subsidiary's
properties, other than pursuant to the Loan Documents.

C. Binding Obligation. This Supplement has been duly
------------------
executed and delivered by such Kaiser Subsidiary and this
Supplement and the Supplemented Agreement constitute the legal,
valid and binding obligations of such Kaiser Subsidiary,
enforceable against such Kaiser Subsidiary in accordance with
their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally and by general
principles of equity.

D. Governmental Approval, Regulation, etc. No
----------------------------------------
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or
other Person is required for the due execution, delivery or
performance of this Supplement by such Kaiser Subsidiary, other
than the filing of appropriate financing statements.

Section 4. Miscellaneous.
--------------

A. Applicable Law. THIS SUPPLEMENT SHALL BE DEEMED
---------------
TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO SUCH LAWS
RELATING TO CONFLICTS OF LAWS.

B. Headings. The various headings of this Supplement
---------
are inserted for convenience only and shall not affect the
meaning or interpretation of this Supplement or any provision
hereof.

C. Counterparts. This Supplement may be executed by
-------------
the parties hereto in several counterparts and by the different
parties on separate counterparts, each of which shall be deemed
to be an original and all of which shall constitute together but
one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached
to the same document.

D. Severability. Any provision of this Supplement
-------------
which is prohibited or unenforceable in any jurisdiction shall,
as to such provision and such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Supplement or
affecting the validity or enforceability of such provisions in
any other jurisdiction.

IN WITNESS WHEREOF, this Supplement has been duly
executed and delivered as of the day and year first above
written.

BANKAMERICA BUSINESS CREDIT, KAISER BELLWOOD CORPORATION
INC., as Agent

By: By:
---------------------- ----------------------
Name:Michael J. Jasaitis Name: Karen A. Twitchell
Its: Vice President Its: Treasurer

ACKNOWLEDGED AND AGREED TO:

AKRON HOLDING CORPORATION KAISER ALUMINUM & CHEMICAL
INVESTMENT, INC.

By: By:
---------------------- ------------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

KAISER ALUMINUM PROPERTIES, INC. KAISER ALUMINUM TECHNICAL
SERVICES, INC.

By: By:
----------------------- -----------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

OXNARD FORGE DIE COMPANY, INC. KAISER ALUMINIUM
INTERNATIONAL, INC.

By: By:
---------------------- -----------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

KAISER ALUMINA AUSTRALIA KAISER FINANCE CORPORATION
CORPORATION

By: By:
---------------------- ------------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

KAISER MICROMILL HOLDINGS, LLC KAISER SIERRA MICROMILLS, LLC

By: By:
---------------------- ------------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

KAISER TEXAS SIERRA MICROMILLS, LLC KAISER TEXAS MICROMILL
HOLDINGS, LLC

By: By:
---------------------- ------------------------
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer Its: Treasurer

Supplement to the Subsidiary Security Agreement
-----------------------------------------------

Schedule I

U.S. Trademarks, Trade Names and Service Marks

As of the Tenth Amendment Effective Date, there
are no Trademarks registered in the name of the New
Kaiser Subsidiary in the United States Patent and
Trademark Office.

Supplement to the Subsidiary Security Agreement
------------------------------------------------

Schedule II

U.S. Patents

As of the Tenth Amendment Effective Date, there
are no Patents registered in the name of the New Kaiser
Subsidiary in the United States Patent and Trademark
Office.

Supplement to the Subsidiary Security Agreement
-----------------------------------------------

Schedule III

Location of Collateral

The chief place of business and the chief executive
office of the New Kaiser Subsidiary as of the Tenth Amendment
Effective Date is, and for the four-month period immediately
preceding such date (or such shorter time as such New Kaiser
Subsidiary has been organized) has been, located at 6177 Sunol
Boulevard, Pleasanton, California 94566-7769 or 5847 San Felipe,
Suite 2600, Houston, Texas 77057-3010.

As of the Tenth Amendment Effective Date, all of the
current books and records located in the United States of the New
Kaiser Subsidiary, including its records regarding any Accounts
and contracts relating to any Accounts and all originals, if any,
of Chattel Paper and Documents (including all Documents covering
any Goods of such New Kaiser Subsidiary), and all of the New
Kaiser Subsidiary's other books and records, contracts, Chattel
Paper, Equipment, Documents, Inventory, and other Goods located
in the United States (excluding such books and records,
Documents, Equipment, contracts, Chattel Paper, Inventory, or
other Goods which are in transit or which are otherwise
temporarily off such premises in the ordinary course of such New
Kaiser Subsidiary's business) are located at:

6177 SUNOL BOULEVARD
PLEASANTON, CALIFORNIA 94566-7769
(ALAMEDA COUNTY)

5847 SAN FELIPE
SUITE 2600
HOUSTON, TEXAS 77057-3010
(HARRIS COUNTY)

1901 REYMET ROAD
RICHMOND, VIRGINIA 23237

6601 WEST BROAD STREET
RICHMOND, VIRGINIA 23230

401 MADRID AVENUE
TORRANCE, CALIFORNIA 90509
(LOS ANGELES COUNTY)

Supplement to the Subsidiary Security Agreement
------------------------------------------------

Schedule IV

Third Party Locations of Collateral

As of the Tenth Amendment Effective Date, Collateral of the
New Kaiser Subsidiary may be located at the following third party
locations:

CNC MACHINING
515 HULL STREET
RICHMOND, VIRGINIA 23224

B & B ELECTROPLATING
400 MCGEE WAY
BELTON, SOUTH CAROLINA 29627
(ANDERSON COUNTY)

ROBIN INDUSTRIES
1265 WEST 65TH STREET
CLEVELAND, OHIO 44102
(CUYAHOGA COUNTY)

WASHINGTON ALUMINUM
1330 KNECHT AVE.
BALTIMORE, MARYLAND 21226
(BALTIMORE COUNTY)

AEROTEC INC.
9505 JEFFERSON DAVIE HWY.
RICHMOND, VIRGINIA 23237

IMCO RECYCLING INC.
388 WILLIAMSON DRIVE
LOUDON, TN 37774
(LOUDON COUNTY)

MUELLER IMPACTS CO.
2409 WILLS STREET
MARYSVILLE, MI 48040
(ST. CLAIR COUNTY)

Supplement to the Subsidiary Security Agreement
-----------------------------------------------

Schedule V

Deposit and Cash Equivalent Investment Accounts

As of the Tenth Amendment Effective Date, the New Kaiser
Subsidiary has no deposit accounts or accounts for holding Cash
Equivalent Investments in the United States. It is anticipated
that the New Kaiser Subsidiary will open account no. 79-51868 at
Bank of America, 231 South La Salle Street, Chicago, Illinois.

Supplement to the Subsidiary Security Agreement
------------------------------------------------

Schedule VI

List of Trade Names and Fictitious Business Names

No additional information.

List of Filing Offices

Reference is made to Schedule B to the opinion of Kramer,
Levin, Naftalis & Frankel, dated June 27, 1997, which Schedule B
is incorporated herein by this reference.

EXHIBIT B

SUPPLEMENT TO SUBSIDIARY GUARANTY
---------------------------------

THIS SUPPLEMENT TO SUBSIDIARY GUARANTY (this
"Supplement"), dated as of June 25, 1997, is by and between
----------
Kaiser Bellwood Corporation, a Delaware corporation, (the "New
----
Kaiser Subsidiary"), and BankAmerica Business Credit, Inc., a
- ------------------
Delaware corporation, as agent for the Secured Lenders (as
defined in the Credit Agreement referred to below) (in such
capacity, together with its successors and assigns in such
capacity, the "Agent"). Capitalized terms used, but not defined,
-----
herein shall have the meanings given to such terms in the Credit
Agreement, as amended by the Tenth Amendment.

W I T N E S S E T H:

WHEREAS, Kaiser Aluminum & Chemical Corporation, a
Delaware corporation (the "Company"), Kaiser Aluminum
--------
Corporation, a Delaware corporation (the "Parent Guarantor"), the
-----------------
various financial institutions that are or may from time to time
become parties to the Credit Agreement (collectively, the
"Lenders" and, individually, a "Lender"), and the Agent are
-------- -------
parties to the Credit Agreement, dated as of February 15, 1994,
as amended by the First Amendment to Credit Agreement, dated as
of July 21, 1994, the Second Amendment to Credit Agreement, dated
as of March 10, 1995, the Third Amendment to Credit Agreement and
Acknowledgment, dated as of July 20, 1995, the Fourth Amendment
to Credit Agreement, dated as of October 17, 1995, the Fifth
Amendment to Credit Agreement, dated as of December 11, 1995, the
Sixth Amendment to Credit Agreement, dated as of October 1, 1996,
the Seventh Amendment to Credit Agreement, dated as of December
17, 1996, the Eighth Amendment to Credit Agreement, dated as of
February 24, 1997, and the Ninth Amendment to Credit Agreement,
dated as of April 21, 1997; and

WHEREAS, as of the date hereof the Company, the Parent
Guarantor, the Lenders and the Agent are entering into a Tenth
Amendment to Credit Agreement (the "Tenth Amendment"); and
----------------

WHEREAS, the New Kaiser Subsidiary is required as a
condition to the effectiveness of the Tenth Amendment to execute
this Supplement; and

WHEREAS, the Required Lenders have consented to the
execution and delivery of this Supplement by the Agent;

NOW, THEREFORE, the parties hereto agree as follows:

Section 1. Addition of New Kaiser Subsidiary.
-------------------- -------------

On and after the Tenth Amendment Effective Date (as
defined in the Tenth Amendment), the New Kaiser Subsidiary shall
be party to the Subsidiary Guaranty and the terms "Guarantor" and
"Guarantors" (as used in the Subsidiary Guaranty) shall include
and also be a reference to the New Kaiser Subsidiary.

Section 2. Guarantors' Representations and Warranties.
------------------------------------------

In order to induce the Agent to enter into this
Supplement and to supplement the Subsidiary Guaranty in the
manner provided herein, and to induce the Required Lenders to
consent to such action by the Agent, the New Kaiser Subsidiary
represents and warrants as a Guarantor to each Lender and the
Agent that, as of the Tenth Amendment Effective Date after giving
effect to the effectiveness of this Supplement, the following
statements are true and correct in all material respects:

A. Authorization of Agreements. The execution and
---------------------------
delivery of this Supplement by such Guarantor and the performance
of the Subsidiary Guaranty as supplemented by this Supplement
(the "Supplemented Agreement") by such Guarantor are within such
----------------------
Guarantor's corporate powers and have been duly authorized by all
necessary corporate action on the part of such Guarantor.

B. No Conflict. The execution and delivery by such
-----------
Guarantor of this Supplement and the performance by such
Guarantor of the Supplemented Agreement do not:

(1) contravene such Guarantor's Organic
Documents;

(3) result in, or require the creation or
imposition of, any Lien on any of such Guarantor's properties,
other than pursuant to the Loan Documents.

C. Binding Obligation. This Supplement has been duly
------------------
executed and delivered by such Guarantor and this Supplement and
the Supplemented Agreement constitute the legal, valid and
binding obligations of such Guarantor, enforceable against such
Guarantor in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally
and by general principles of equity.

Section 3. Miscellaneous.
--------------

B. Headings. The various headings of this Supplement
---------
are inserted for convenience only and shall not affect the
meaning or interpretation of this Supplement or any provision
hereof.

D. Severability. Any provision of this Supplement
------------
which is prohibited or unenforceable in any jurisdiction shall,
as to such provision and such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Supplement or
affecting the validity or enforceability of such provisions in
any other jurisdiction.

IN WITNESS WHEREOF, this Supplement has been duly
executed and delivered as of the day and year first above
written.

BANKAMERICA BUSINESS CREDIT, KAISER BELLWOOD CORPORATION
INC., as Agent

By: By:
--------------------------- ---------------------------
Name:Michael J. Jasaitis Name: Karen A. Twitchell
Its: Vice President Its: Treasurer