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                                                                  EXHIBIT 10.5.1
                       ENVIRONMENTAL GUARANTY AGREEMENT


THIS ENVIRONMENTAL GUARANTY AGREEMENT is dated as of June 19, 1997 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 ("Borrower") as evidenced by that certain
reimbursement agreement dated as of june 1, 1997, between bank and borrower (the
"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 "Credit
Extension".

B.  It is a condition precedent to Bank's obligation to proceed with the Credit
Extension that Borrower execute and deliver to Bank that certain Environmental
Compliance Agreement of even date herewith (as from time to time amended, the
"Environmental Agreement").  Capitalized terms used herein without definition
shall have the respective meanings ascribed thereto in the environmental
agreement.

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

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

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 

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     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 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 

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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 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

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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 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
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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
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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 
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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.

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 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

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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.

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.


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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 June 19, 1997

                                       GUARANTORS

                                       KAISER VENTURES INC.,
                                       a Delaware corporation

                                  By:  /s/ James F. Verhey
                                       -------------------
                                       Name:  James F. Verhey
                                       Title:  Sr. Vice President Finance & CFO


                                       KAISER RECYCLING CORPORATION,
                                       a Delaware corporation

                                  By:  /s/James F. Verhey
                                       ------------------
                                       Name:  James F. Verhey
                                       Title:  Sr. Vice President Finance & CFO

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

Address for Bank:                 Union Bank of California, N.A.
                                  530 B Street, Fourth Floor
                                  San Diego, California  92101
                                  Attention:  Michael E. Conboy

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