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                                                                    EXHIBIT 10.4
                                                                    ============

                          FIRST AMENDED AND RESTATED
                       ENVIRONMENTAL GUARANTY AGREEMENT


     THIS FIRST AMENDED AND RESTATED ENVIRONMENTAL GUARANTY AGREEMENT is dated
as of May 1, 2000 and is being executed and delivered by the undersigned
Guarantors to and for the benefit of Union Bank of California, N.A. ("Bank") in
connection with the following:

     A.   Bank has made financing arrangements with West Valley MRF, LLC, a
California limited liability company (the "Borrower")  as evidenced by that
certain Reimbursement Agreement dated as of June 1, 1997, between Bank and
Borrower (as amended from time to time, the "1997 Reimbursement Agreement").
Such extension of credit or other financing arrangements, together with any
amendments, replacements, substitutions, extensions or refundings thereof, are
hereinafter referred to as the "1997 Credit Extension".

     B.   In connection with the 1997 Credit Extension, Borrower has undertaken
certain obligations set forth in that certain Environmental Compliance Agreement
dated as of June 19, 1997 between Borrower and Bank (the "1997 ECA").  Pursuant
to that certain Environmental Guaranty Agreement dated as of June 19, 1997 (the
"1997 Kaiser Environmental Guaranty"), the undersigned guaranteed certain of the
Borrower's obligations under the 1997 ECA.

     C.   Concurrently herewith, Bank and Borrower are entering into that
certain Reimbursement Agreement dated as of the date hereof (as amended from
time to time, the "2000 Reimbursement Agreement"), pursuant to which Bank has
agreed to issue its irrevocable Letter of Credit (the "Letter of Credit") to
provide credit support for bond financing for the expansion of the facilities
financed with the proceeds of the 1997 Credit Extension.

     D.   It is a condition precedent to Bank's obligation to proceed with the
issuance of the Letter of Credit that (i) Borrower amend and restate the 1997
ECA by executing and delivering to Bank that certain First Amended and Restated
Environmental Compliance Agreement of even date herewith (as from time to time
amended, the "Environmental Agreement"); and (ii) the undersigned guarantors
amend and restate the 1997 Kaiser Environmental Guaranty in its entirety by
executing and delivering to Bank this Amended and Restated Environmental
Guaranty Agreement (this "Guaranty").  Capitalized terms used herein without
definition shall have the respective meanings ascribed thereto in the
Environmental Agreement.

     E.   Each Guarantor expects to derive benefit, either directly or
indirectly, as a result of the maintenance of the 1997 Credit Extension and the
issuance of the Letter of Credit and acknowledges that Bank would not proceed
with the performance of its obligations with respect to the Credit Extensions
without receiving the Environmental Agreement from Borrower and this Guaranty
from the Guarantors.

     NOW, THEREFORE, the undersigned Guarantors do hereby agree as follows:

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1.   Obligations Guaranteed.

     (a)  For consideration, the adequacy, sufficiency and receipt of which is
hereby acknowledged, the undersigned (collectively, "Guarantors" and
individually each or any "Guarantor"), jointly and severally guarantee to Bank
that, upon the occurrence of an Event of Default under the Environmental
Agreement arising as a result of Borrower's failure to pay or perform any
Kaiser-Related Environmental Obligation (hereinafter a "Guaranteed Obligation"),
Guarantors shall promptly pay and/or perform such Guaranteed Obligation without
further notice or demand except for the notices required pursuant to the
Environmental Agreement and shall pay to Bank and hold Bank harmless from all
damages, costs, expenses and liabilities incurred by Bank as a result of
Borrower's failure to perform such Guaranteed Obligations, whether Borrower is
liable individually or jointly or with others, whether incurred before, during
or after any bankruptcy, reorganization, insolvency, receivership or similar
proceeding ("Insolvency Proceeding"), and whether recovery thereof is or becomes
barred by a statute of limitations or is or becomes otherwise unenforceable,
together with all reasonable expenses of, for and incidental to collection,
including reasonable attorneys' fees.

     (b)  Without limiting Guarantors' liability under clause (a) above,
Guarantors jointly and severally guarantee to Bank that, if all the following
                                                         --
events occur, namely: (i) the occurrence of an Event of Default under the
Environmental Agreement arising as a result of Borrower's failure to pay or
perform any Burrtec-Related Environmental Obligation; and (ii) the breach of
such Burrtec-Related Environmental Obligation caused or contributed to the
release, at, on, in, under, above, around or that affects any Portion of the
Property, of some Hazardous Substances or newly-formed Hazardous Substances not
present at, on, in, under, above, around, or that affects any portion of the
Property on or prior to June 19, 1997; and (iii) as a matter of applicable
federal or state law, either Guarantor is liable with respect to the release of
such newly formed Hazardous Substance; and (iv) Bank obtains a judgment against
BWI arising out of BWI's liability as a guarantor of such Burrtec-Related
Environmental Obligation and such release; and (v) such judgement remains
unsatisfied after the later to occur of (1) completion by the Bank of a
judgement debtor's examination of BWI and the recordation of abstracts of
judgement in each county in the State of California in which BWI holds title to
real property as disclosed in such debtor's examination; or (2) ninety (90) days
shall have elapsed after entry of judgement against BWI; then, Guarantors,
                                                         ----
jointly and severally agree to pay to Bank immediately upon demand the amount of
the judgment obtained against BWI in the above-described circumstances; provided
                                                                        --------
however, if an Insolvency Proceeding is commenced by or against BWI prior to
-------
Bank's obtaining a judgment against BWI, then upon Bank's obtaining a final
determination of its claim against BWI from the court having jurisdiction in
such Insolvency Proceeding, then Guarantors jointly and severally agree to pay
to Bank immediately upon demand the amount determined by such court to be due,
provided Guarantors would also be liable under (iii) of this paragraph and upon
Bank's assignment of its claim in the bankruptcy to the Guarantors.  Guarantors'
obligations under this Environmental Guaranty Agreement are in addition to (i)
any other guaranties of the Guaranteed Obligations; and (ii) any other
guaranties now or hereafter given by Guarantors to Bank in connection with any
other obligations of Borrower to Bank; provided, however, that no other
guaranties now or hereafter given by Guarantors to Bank in connection with any
other

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obligations of Borrower to Bank shall apply to the Environmental Agreement or
any obligations thereunder.

2.   Reinstatement. All of Bank's rights pursuant to this Guaranty continue with
respect to amounts previously paid to Bank on account of any Guaranteed
Obligations which are thereafter restored or returned by Bank, whether in an
Insolvency Proceeding of Borrower or for any other reason, all as though such
amounts had not been paid to Bank, and each Guarantor's liability under this
Guaranty (and all its terms and provisions) shall be reinstated and revived,
notwithstanding any surrender or cancellation of this Guaranty.  Bank, in its
sole discretion, may determine whether any amount paid to it must be restored or
returned; provided, however, that if Bank elects to contest any claim for return
or restoration, each Guarantor agrees to indemnify and hold Bank harmless from
and against all reasonable costs and expenses, including reasonable attorneys'
fees, expended or incurred by Bank in connection with such contest.  If any
Insolvency Proceeding is commenced by or against Borrower or any Guarantor, at
Bank's election, each Guarantor's obligations under this Guaranty shall
immediately and without notice or demand become due and payable, whether or not
then otherwise due and payable.

3.   Authorization. Each Guarantor authorizes Bank, subject to the Environmental
Agreement, without notice and without affecting such Guarantor's liability under
this Guaranty, from time to time, whether before or after any revocation of this
Guaranty, to (a) renew, extend, accelerate, release, subordinate or waive, the
interest rate, time or place for payment or any other terms of all or any part
of the Guaranteed Obligations; provided however, without limiting Bank's rights
                               ----------------
under the preceding clause of this subsection 3(a), no amendment or modification
of the Guaranteed Obligations agreed to between Bank and Borrower shall be
binding upon either Guarantor without such Guarantor's written consent; (b)
accept delinquent or partial payments on the Guaranteed Obligations; (c) take or
not take security or other credit support for this Guaranty or for all or any
part of the Guaranteed Obligations, and exchange, enforce, waive, release,
subordinate, fail to enforce or perfect, sell or otherwise dispose of any such
security or credit support; (d) apply proceeds of any such security or credit
support and direct the order or manner of its sale or enforcement as Bank, in
its sole discretion, may determine; and (e) release or substitute Borrower or
any Guarantor or other person or entity liable in respect of all or any part of
the Guaranteed Obligations.

4.   Waivers.  To the maximum extent permitted by law and subject the provisions
of the Environmental Agreement, each Guarantor waives (a) all rights to require
Bank to proceed against Borrower or proceed against, enforce or exhaust any
security for the Guaranteed Obligations or to marshal assets or to pursue any
other remedy in Bank's power whatsoever; (b) all defenses arising by reason of:
any disability or other defense of Borrower, the cessation for any reason of the
liability of Borrower, any defense that any other indemnity, guaranty or
security was to be obtained, any claim that Bank has made such Guarantor's
obligations more burdensome or more burdensome than Borrower's obligations, and
the use of any proceeds of the Guaranteed Obligations other than as intended or
understood by Bank or such Guarantor; (c) all presentments, demands for
performance, notices of nonperformance, protests, notices of protest, notices of
dishonor, notices of acceptance of this Guaranty, and all other notices or
demands to which such Guarantor might otherwise be entitled; (d) all conditions
precedent to the effectiveness of this

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Guaranty except as provided herein; (e) all rights to file a claim in connection
with the Guaranteed Obligations in an Insolvency Proceeding filed by or against
Borrower; (f) all rights to require Bank to enforce any of its remedies and (g)
until the Guaranteed Obligations are satisfied or fully paid, with such payment
not subject to return: (i) all rights of subrogation, indemnification or
reimbursement, (ii) all rights of recourse to any assets or property of Borrower
or to any collateral or credit support for the Guaranteed Obligations, (iii) all
rights to participate in or benefit from any security or credit support Bank may
have or acquire, and (iv) all rights, remedies and defenses such Guarantor may
have or acquire against Borrower; provided however that anything in this
Guaranty to the contrary notwithstanding, the Guarantors shall only be required
to waive and forebear the enforcement of any rights of subrogation,
indemnification or reimbursement against any person or entity so long as such
person or entity is in default in the payment or performance of any obligation
due and owing to Bank; during the continuance of any such default all such
rights of subrogation, indemnification and reimbursement shall be subordinated
as provided in Section 6 below. Bank may foreclose, either by judicial
foreclosure or by exercise of power of sale, any deed of trust which secures any
Guaranteed Obligations, and even though such foreclosure or exercise may destroy
or diminish the rights of the Guarantors, or any of them, against Borrower, each
Guarantor shall remain liable for any part of the Guaranteed Obligations
remaining unpaid after foreclosure. Under California law, in the absence of
waivers and agreements to the contrary, if a creditor forecloses by trustee's
sale on a deed of trust securing a loan, the creditor cannot thereafter enforce
a guarantor's liability for the unpaid balance of the loan. This results because
the trustee's sale would eliminate the guarantor's right of subrogation, and
therefore the guarantor would be unable to obtain reimbursement from the
Borrower. Each Guarantor waives the right to assert the defense described in the
two immediately preceding sentences, and each Guarantor agrees that such
Guarantor shall remain liable for any part of the Guaranteed Obligations
remaining unpaid after a trustee's sale, although such Guarantor would not
become subrogated to any part of the Guaranteed Obligations that such Guarantor
has paid and would therefore be unable to obtain reimbursement for those
payments from Borrower. Each Guarantor may therefore incur a partially or
totally unreimbursable liability under the Guaranty. Each Guarantor waives all
benefits under California Civil Code sections 2808, 2809, 2810, 2819, 2839,
2845, 2846, 2848, 2849, 2850, 2855, 2899 and 3433 and California Code of Civil
Procedure sections 580a, 580b, 580d and 726.

5.   Guarantor to Keep Informed. Each Guarantor warrants having established with
Borrower adequate means of obtaining, on an ongoing basis, such information as
such Guarantor may require concerning all matters bearing on the risk of
nonpayment or nonperformance of the Guaranteed Obligations.  Each Guarantor
assumes sole, continuing responsibility for obtaining such information from
sources other than from Bank.  Bank has no duty to provide any information to
any Guarantor until Bank receives such Guarantor's written request for specific
information in Bank's possession and Borrower has authorized Bank to disclose
such information to such Guarantor.

6.   Subordination.  All liabilities and commitments of Borrower to any
Guarantor, and all liabilities and commitments of any guarantor of any of the
Guaranteed Obligations to any other Guarantor, which presently or in the future
may exist ("Guarantor Claims") are hereby subordinated to the Guaranteed
Obligations; provided however that so long as the party against which such

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Guarantor Claims are asserted is not in default in the payment of any
obligations due and owing to Bank, payments and distributions from Borrower to
any Guarantor or among or between any of the guarantors (including any
Guarantor) of any of the Guaranteed Obligations shall be permitted in the
ordinary course of business. Whenever any such default shall have occurred and
be continuing, Guarantor Claims against such party in default will be enforced,
and performance thereon received by any Guarantor only as a trustee for Bank,
and each Guarantor will promptly pay over to Bank upon demand all proceeds
recovered for application to the Guaranteed Obligations without reducing or
affecting such Guarantor's liability under other provisions of this Guaranty.

7.   Representations and Warranties.

     a.   Corporate Existence and Power.  Each Guarantor (i) is a corporation
          -----------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware, (ii) is duly qualified or licensed as a foreign corporation
and is in good standing in the State of California and in each other
jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed and (iii) has all requisite
corporate power and authority to own or lease and operate its properties and to
carry on its business as now conducted and as proposed to be conducted.

     b.   Authorization.  The execution, delivery and performance by the
          -------------
Guarantors of this Guaranty, and the consummation of the transactions
contemplated hereby and thereby, are within each Guarantor's corporate powers,
have been duly authorized by all necessary corporate action of such Guarantor
and do not contravene such Guarantor's charter documents or bylaws.

     c.   Binding Effect.  This Guaranty has been duly executed and delivered by
          --------------
the Guarantors.  This Guaranty is the legal, valid and binding obligation of
each Guarantor, enforceable against such Guarantor in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors, rights
generally.

     d.   Other Information.   To the actual knowledge of Guarantors, no
          -----------------
information, exhibit or report furnished by any Guarantor to Bank in connection
with this Guaranty contains any material misstatement of fact or omits to state
a material fact or any fact necessary to make the statements contained therein,
in light of the circumstances in which made, not misleading.

     e.   Litigation.  Except as previously disclosed in writing to Bank, there
          ----------
is no action, suit, investigation, litigation or proceeding affecting the
Guarantors pending or, to the best knowledge of the Guarantors, threatened
before any court, governmental agency or arbitrator (a) that would be reasonably
likely to have a materially adverse effect on the business, condition (financial
or otherwise), operations, performance, properties or prospects of the Guarantor
or (b) that purports to affect the legality, validity or enforceability of this
Guaranty or the consummation of the transactions contemplated hereby.

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8.   Covenants.  The Guarantors covenant and agree that, unless Bank otherwise
consents in writing and so long the Guaranteed Obligations remain unpaid (i)
each of the Guarantors will, preserve, renew and keep in full force and effect
its corporate existence (in the jurisdiction thereof) and the rights,
privileges, franchises and governmental approvals necessary or desirable for the
normal conduct of its business; and (ii) neither Guarantor will merge or
consolidate with or into, or sell, assign, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to, any Person,
unless, in the case of any merger or consolidation, the Guarantor is the
surviving entity. Reference is made to the Operation & Maintenance Agreement
(the "O&M Agreement") dated as of June 11, 1997 between KVI and the California
Environmental Protection Agency, Department of Toxic Substances Control (the
"Department"), referred to in Section 6 of the Environmental Agreement. KVI
agrees to provide Bank with true and complete copies of all written reports and
review summaries provided by KVI to the Department pursuant to the O&M
Agreement, including those required under Sections 3, 4, 5 or 6 of the O&M
Agreement, promptly after their submission to the Department. KVI hereby
confirms that, except as previously disclosed to Bank in writing, the O&M
Agreement has not been modified or amended.

9.   Assignments.  Without notice to any of the Guarantors, Bank may assign the
Guaranteed Obligations and this Guaranty, in whole or in part, and may disclose
to any prospective or actual purchaser of all or part of the Guaranteed
Obligations any and all information Bank has or acquires concerning any
Guarantor, this Guaranty and any security for this Guaranty.  The Bank agrees to
use reasonable efforts to ensure that any of the information referred to in this
paragraph which is not contained in a report or other document otherwise
available to the public generally, to the extent permitted by law and except as
may be required by valid subpoena or in the normal course of business
operations, will be treated confidentially by the Bank and will not be
distributed or otherwise made available by the Bank to any person or entity,
other than (i) the Bank's employees, authorized agents or representatives who
need to review or be informed of such information in connection with their
employment by Bank; and (ii) such prospective or actual purchaser (which shall
be required to give appropriate written assurance of confidential treatment of
such information).

10.  Counsel Fees and Costs.  The prevailing party shall be entitled to
attorneys' fees (including a reasonable allocation for any appropriately
documented fees of Bank's internal counsel), and all other reasonable costs and
expenses which it may incur in connection with the enforcement or preservation
of its rights under, or defense of, this Guaranty or in connection with any
other dispute or proceeding relating to this Guaranty, whether or not incurred
in an Insolvency Proceeding, arbitration, administrative hearing, litigation or
other proceeding.

11.  [Intentionally omitted]

12.  Multiple Guarantors/Borrowers.  When there is more than one Borrower named
herein, or when this Guaranty is executed by more than one Guarantor, then the
words "Borrower" and "Guarantor," respectively, shall mean all and any one or
more of them, and their respective successors and assigns, including debtors-in-
possession and bankruptcy trustees, and words used herein in the singular shall
be considered to have been used in the plural where the context and

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construction so requires in order to refer to more than one Borrower or
Guarantor, as the case may be. This Guaranty may be executed in any number of
counterparts and by different parties hereto on separate counterparts. Each
counterpart, when so executed and delivered, shall be deemed to be an original
and all counterparts, taken together, shall constitute but one and the same
Guaranty.

13.  Waiver of Jury Trial.  EACH GUARANTOR AND BANK HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS GUARANTY, ANY OF THE
GUARANTEED OBLIGATIONS, OR ANY RELATED AGREEMENTS OR INSTRUMENTS, OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DISCUSSIONS, DEALINGS OR ACTIONS
OF SUCH PARTIES OR ANY OF THEM (WHETHER ORAL OR WRITTEN) WITH RESPECT THERETO,
OR TO THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.  EACH
PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED IN ACCORDANCE WITH THE PROVISIONS OF THE ALTERNATIVE
DISPUTE RESOLUTION AGREEMENT REFERRED TO IN PARAGRAPH 18 BELOW.  EACH GUARANTOR
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER DOCUMENT TO WHICH IT
IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK AGREEING
TO THE CREDIT EXTENSION REFERRED TO HEREIN.

14.  Integration/Severability/Amendments.  This Guaranty is intended by each of
the Guarantors and Bank as the complete, final expression of their agreement
concerning its subject matter.  It supersedes all prior understandings or
agreements with respect thereto and may be changed only by a writing signed by
Bank and the Guarantor intended to be bound by such writing.  No course of
dealing, or parol or extrinsic evidence shall be used to modify or supplement
the express terms of this Guaranty.  If any provision of this Guaranty is found
to be illegal, invalid or unenforceable, such provision shall be enforced to the
maximum extent permitted, but if the provision is fully unenforceable, such
provision shall be severable, and this Guaranty shall be construed as if such
provision had never been a part of this Guaranty and the remaining provisions
shall continue in full force and effect.

15.  Joint and Several.  If more than one Guarantor signs this Guaranty, the
obligations of each Guarantor under this Guaranty are joint and several in
accordance with the terms of this Agreement, and independent of the Guaranteed
Obligations and of the liabilities and commitments of any other person or
entity.  A separate action or actions may be brought and prosecuted against any
Guarantor, whether action is brought against Borrower, any other Guarantor or
any other person or entity liable in respect of all or any part of the
Guaranteed Obligations, and whether Borrower or such others are joined in any
such action.

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16.  Notice.  Any notice given by any party under this Guaranty shall be
effective only upon its receipt by the other party and only if (a) given in
writing and (b) personally delivered or sent by United States mail, postage
prepaid, and addressed to Bank or Guarantor at their respective addresses for
notices indicated below.  Each Guarantor and Bank may change the place to which
notices, requests, and other communications are to be sent to them by giving
written notice of such change to the other.

17.  California Law.  Subject to paragraph 13 of this Guaranty, this Guaranty
shall be governed by and construed according to the laws of California, and each
Guarantor submits to the nonexclusive jurisdiction of the state or federal
courts in California.

18.  Dispute Resolution.  This Guaranty hereby incorporates any alternative
dispute resolution agreement previously, concurrently or hereafter executed
between any Guarantor and Bank.

19.  Scope of Guaranty.  The parties acknowledge that this Guaranty is given
solely with respect to environmental obligations that may arise as specified in
the Environmental Agreement and as set forth herein.

     Each Guarantor acknowledges having received a copy of this Guaranty and
having made each waiver contained in this Guaranty with full knowledge of its
consequences.

Dated as of May 1, 2000

                                    GUARANTORS

                                    KAISER VENTURES INC.,
                                    a Delaware corporation

                                    By: /s/James F. Verhey
                                        ---------------------------------------
                                        Name:  James F. Verhey
                                        Title:  Executive Vice President - CFO


                                    KAISER RECYCLING CORPORATION,
                                    a Delaware corporation

                                    By: /s/Eric D. Herbert
                                        ---------------------------------------
                                        Name:  Eric D. Herbert
                                        Title:  Vice President


Address for both Guarantors:  c/o Kaiser Ventures, Inc.
                              3633 E. Inland Empire Blvd., Suite 850
                              Ontario, CA   91764

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Address for Bank:             Union Bank of California, N.A.
                              530 B Street, Fourth Floor
                              San Diego, California  92101
                              Attention: Commercial Markets Group

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