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                                                                   EXHIBIT 10.12



                              EMPLOYMENT AGREEMENT


This Agreement dated as of January 1, 1997 (the "Effective Date") is made by
and among Trojan Trading Co., Firma Plastic Co., Inc., Firma, Inc., California
Metals Recycling, Inc. and MacLeod Metals Co., each California corporations
(the "Companies" or individually, a "Company"), and Ian MacLeod ("Employee").

1.                      DUTIES AND SCOPE OF EMPLOYMENT.

          a)                       EMPLOYMENT AND DUTIES.  Beginning on the
                    Effective Date, the Companies agree to employ the Employee,
                    and Employee agrees to be employed, as President and Chief
                    Executive Officer of  each of the Companies.  Employee shall
                    assume and discharge such duties as are mutually agreed upon
                    by the Companies and Employee and as are commensurate with
                    such position, except that Employee shall not have the
                    ability to terminate the Controller of the Companies, which
                    power shall be vested solely in the Board of Directors of
                    the Company.  During the term of the Employee's employment
                    with the Companies, the Employee shall devote his full time,
                    skill and attention to his duties and responsibilities,
                    which the Employee shall perform faithfully, diligently and
                    competently, and the Employee shall use his best efforts to
                    further the business of the Companies and their affiliated
                    entities.

          b)                       TERM OF EMPLOYMENT.  Employee's employment
                    with the Companies pursuant to this Agreement shall commence
                    on the Effective Date and shall continue until the repayment
                    or termination of the Class A Note (as defined in the
                    Acquisition Agreement dated January 1, 1997 among Metal
                    Management, Inc., MMI Acquisition, Inc., Metal Management
                    Realty, Inc., California Metals Recycling, Inc., Firma,
                    Inc., MacLeod Metals Co., Firma Plastic Co., Inc., Trojan
                    Trading Co., Ian MacLeod, Marilyn MacLeod and the MacLeod
                    Family Trust dated January 30, 1993) (the "Term"), unless
                    terminated earlier as provided herein.

2.                       BASE COMPENSATION.  The Companies (collectively) shall
          pay the Employee as compensation for his services hereunder a base
          salary at the annualized rate of $60,000 (the "Base Salary"). Such
          salary shall be paid periodically in accordance with normal payroll
          practices of the Companies.

3.                        EMPLOYEE BENEFITS.  The Employee shall be eligible to
          participate in the employee benefit plans and executive compensation
          programs maintained by the Companies applicable to other key
          executives of the Companies, including (without limitation) retirement
          plans, savings or profit sharing plans, stock option, incentive or
          other bonus plans, life, disability, health, accident and other
          insurance programs, paid vacations, and similar plans or programs,
          subject, in each case, to the generally applicable terms and
          conditions of the applicable plan or program in question and to the
          determination of any committee administering such plan or program.
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4.                       EXPENSES.  The Companies shall pay or reimburse
          Employee for reasonable travel, entertainment or other expenses
          incurred by Employee in the furtherance of or in connection with the
          performance of Employee's duties hereunder in accordance with
          established policies of the Companies. Employee shall furnish the
          Companies with evidence of the incurrence of such expenses within a
          reasonable period of time from the date that they were incurred.

5.                       TERMINATION.

          a)                            TERMINATION BY THE COMPANIES.  If
                    Employee is terminated for Cause (as defined below), then
                    Employee shall not be entitled to receive severance or other
                    benefits, except for those, if any, as may then be
                    established and applicable under the Companies' severance
                    and benefits plans and policies existing at the time of such
                    termination.  The Companies shall not terminate Employee's
                    employment with them during the term other than for Cause.
                    After the Term, Employee's employment with the Companies
                    shall be at will.

          b)                            TERMINATION BY EMPLOYEE.  If Employee
                    voluntarily terminates his employment with any of the
                    Companies, then Employee shall not be entitled to receive
                    severance or other benefits.

          c)                            DEFINITION OF CAUSE.  For purposes of
                    this Agreement, the term "Cause" is defined as any one or
                    more of the following occurrences:

                    i)        Employee's conviction by, or entry of a plea of
                              guilty or nolo contendere in, a court of competent
                              and final jurisdiction for any crime which
                              constitutes a felony in the jurisdiction involved;
                              or

                    ii)       Employee's commission of an act of fraud or
                              misappropriation of funds upon any of the
                              Companies; or

                    iii)      Employee's breach of a material provision of this
                              Agreement or any other agreement with any of the
                              Companies; or

                    iv)       Gross negligence by Employee in the scope of his
                              services to any of the Companies; or

                    v)        Employee's commencement of employment with another
                              employer while he is an Employee of any of the
                              Companies; or

                    vi)       Material nonconformance with any of the Companies
                              standard business practices and policies generally
                              known by employees of the Companies, made known to
                              Employee or delivered in writing to Employee.
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          d)        Notwithstanding the foregoing, Employee shall not be deemed
                    to have been terminated for Cause without (i) reasonable
                    notice to Employee setting forth the reasons for such
                    Company's intention to terminate for Cause, and (ii) an
                    opportunity for Employee, together with his counsel, if any,
                    to be heard before the Board of Directors of such Company.

6.                       ARBITRATION; CONSENT TO PERSONAL JURISDICTION.

          a)             Employee agrees that any dispute or controversy 
                     arising out of, relating to, or in connection with this
                     Agreement, or the interpretation, validity, construction,
                     performance, breach, or termination thereof, shall be
                     finally settled by binding arbitration to be held in San
                     Francisco County, California under the Commercial
                     Arbitration Rules, of the American Arbitration Association
                     as then in effect (the "Rules"). The arbitrator may grant
                     injunctions or other relief in such dispute or controversy.
                     The decision of the arbitrator shall be final, conclusive
                     and binding on the parties to the arbitration.  Judgment
                     may be entered on the arbitrator's decision in any court
                     having jurisdiction.

          b)             The arbitrator(s) shall apply California law to the 
                    merits of any dispute or claim, without reference to rules
                    of conflicts of law.  The arbitration proceedings shall be
                    governed by federal arbitration law and by the Rules,
                    without reference to state arbitration law.

          c)             The Companies, on the one hand, and the Employee, on 
                    the other hand, shall each pay one-half of the costs and
                    expenses of such arbitration and each shall separately pay
                    its counsel fees and expenses.

          d)             EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION 6, WHICH
                    DISCUSSES ARBITRATION.  EMPLOYEE UNDERSTANDS THAT BY SIGNING
                    THIS AGREEMENT, EMPLOYEE AGREES TO SUBMIT ANY CLAIMS ARISING
                    OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT,
                    OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
                    BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND
                    THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF
                    EMPLOYEE'S RIGHT TO A JURY TRIAL AND RELATES TO THE
                    RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
                    EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED
                    TO, THE FOLLOWING CLAIMS:

                    i)             ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF
                              EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND
                              IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND
                              FAIR DEALING, BOTH EXPRESS AND
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                              IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF
                              EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
                              MISREPRESENTATION; NEGLIGENT OR INTENTIONAL
                              INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC
                              ADVANTAGE; AND DEFAMATION.

                    ii)            ANY AND ALL CLAIMS FOR VIOLATION OF ANY 
                              FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT
                              NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT
                              OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE
                              DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE
                              AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR
                              LABOR STANDARDS ACT, THE CALIFORNIA FAIR 
                              EMPLOYMENT AND HOUSING ACT, AND LABOR CODE 
                              SECTION 201, et eq;

                    iii)           ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER 
                              LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR
                              EMPLOYMENT DISCRIMINATION.

7.                     GENERAL PROVISIONS.

          a)              ENTIRE AGREEMENT.  This Agreement represents the 
                    entire agreement and understanding between the parties as 
                    to the subject matter hereof, and supersede all prior or 
                    contemporaneous agreements, whether written or oral.  No 
                    waiver, alteration, or modification, if any, of the 
                    provisions of this Agreement shall be binding unless in
                    writing and signed by duly authorized representatives of the
                    parties hereto.

          b)             SEVERABILITY.  If one or more of the provisions in this
                    Agreement are deemed void by law, then the remaining
                    provisions will continue in full force and effect.

          c)             SUCCESSORS.

                    i)               COMPANY'S SUCCESSORS.  Any successor(s) 
                    to any of the Companies (whether direct or indirect and
                    whether by purchase, lease, merger, consolidation,
                    liquidation or otherwise) to all or substantially all of any
                    such Company's business and/or assets shall assume the
                    obligations under this Agreement and agree expressly to
                    perform the obligations under this Agreement in the same
                    manner and to the same extent as such Company would be
                    required to perform such obligations in the absence of a
                    succession.  For all purposes under this Agreement, the term
                    "Company" shall include any successor to any Company's
                    business and/or assets which executes and delivers the
                    assumption agreement described in this subsection (a) or
                    which becomes bound by the terms of this Agreement by
                    operation of law.
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                    ii)                         EMPLOYEE'S SUCCESSORS.  The
                              terms of this Agreement and all rights of the
                              Employee hereunder shall inure to the benefit of,
                              and be enforceable by, the Employee's personal or
                              legal representatives, executors, administrators,
                              successors, heirs, distributees, devisees and
                              legatees.

          d)                       CONFLICTING OBLIGATIONS.  Employee represents
                    that he has not entered into, and will not enter into, any
                    oral or written agreement in conflict herewith.

          e)                       COUNTERPARTS.  This Agreement may be executed
                    by either of the parties hereto in counterparts, each of
                    which shall be deemed to be an original, but all such
                    counterparts shall together constitute one and the same
                    instrument.

          f)                       GOVERNING LAW; CONSENT TO PERSONAL
                    JURISDICTION.  This Agreement shall be governed by and
                    construed in accordance with the internal substantive laws,
                    and not the choice of law rules, of the State of California.
                    Employee hereby consents to the personal jurisdiction of the
                    state and federal courts located in California for any
                    action or proceeding arising from or relating to this
                    Agreement or relating to any arbitration in which the
                    parties are participants.
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          g)                    NOTICE.  Any notice or communication required or
                    permitted under this Agreement shall be made in writing and
                    delivered personally to the other party or sent by certified
                    or registered mail, return receipt requested and postage
                    prepaid.

          h)        IN WITNESS WHEREOF, this Employment agreement is entered
                    into the date first written above.


IAN MACLEOD






TROJAN TRADING CO.
By:



Print Name
Title



FIRMA PLASTIC CO., INC.
By:



Print Name
Title



FIRMA, INC.
By:



Print Name
Title
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CALIFORNIA METALS RECYCLING, INC.
By:



Print Name
Title



MACLEOD METALS CO.
By:



Print Name
Title



                    [SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]