<PAGE>

                      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 Quarter Ended March 31, 2000        Commission File Number 0-18858



                             KAISER VENTURES INC.
                             --------------------
            (Exact name of registrant as specified in its charter)




          DELAWARE                                        94-0594733
 -------------------------------                      -------------------
 (State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                       Identification No.)


                   3633 East Inland Empire Blvd., Suite 850
                          Ontario, California  91764
             -----------------------------------------------------
             (Address of principal executive offices and zip code)


Registrant's telephone number, including area code: (909) 483-8500


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
                                  ---

Indicate by check mark whether registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.

                              Yes  X      No
                                  ---

On May 2, 2000, the Company had 6,355,153 shares of Common Stock, $.03 par
value, outstanding (including 136,919 shares deemed outstanding and held in
reserve by the Company for issuance to the former general unsecured creditors of
Kaiser Steel Corporation pursuant to its Plan of Reorganization).
<PAGE>

                        TABLE OF CONTENTS TO FORM 10-Q

<TABLE>
<CAPTION>
                                                                                       PAGE
<S>                                                                                   <C>
PART I

     FORWARD-LOOKING STATEMENTS....................................................      1

INTRODUCTION

     BUSINESS UPDATE...............................................................      2

     Item 1.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS.................................      6

     Item 2.  FINANCIAL STATEMENTS.................................................     12

              CONSOLIDATED BALANCE SHEETS..........................................     13

              CONSOLIDATED STATEMENTS OF OPERATIONS................................     15

              CONSOLIDATED STATEMENTS OF CASH FLOWS................................     16

              CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY............     17

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...........................     18

PART II

     Item 1.  LEGAL PROCEEDINGS....................................................     19

     Item 2.  CHANGES IN SECURITIES................................................     20

     Item 3.  DEFAULTS UPON SENIOR SECURITIES......................................     20

     Item 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS....................     20

     Item 5.  OTHER INFORMATION....................................................     21

     Item 6.  EXHIBITS AND REPORTS ON FORM 8-K.....................................     21

SIGNATURES.........................................................................     23
</TABLE>

                       AVAILABILITY OF PREVIOUS REPORTS

     The Company will furnish without charge, to each stockholder, upon written
request of any such person, a copy of the Company's annual report on Form 10-K
for the year ended December 31, 1999, as filed with the Securities and Exchange
Commission, including the financial statement schedules thereto.  Those
requesting a copy of the 10-K Report that are not currently stockholders of the
Company may also obtain a copy directly from the Company.  Requests for a copy
of the 10-K Report should be directed to Executive Vice President-
Administration, at 3633 East Inland Empire Boulevard, Suite 850, Ontario,
California 91764.

     The reader is encouraged to read this Form 10-Q Report in conjunction with
the 10-K Report since the information contained herein is often an update of the
information in such reports.

                                       i
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                     KAISER VENTURES INC. AND SUBSIDIARIES

                                    PART I

                          FORWARD-LOOKING STATEMENTS

     Except for the historical statements and discussions contained herein,
statements contained in this 10-Q Report constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.  Any press
release, 10-K, Annual Report to Stockholders, 10-Q or 8-K Report of the Company
or the Company's website, may include forward-looking statements.  In addition,
other written or oral statements, which constitute forward-looking statements,
have been made and may be made in the future by the Company.  Forward-looking
statements include, without limitation, any statement that forecasts, indicate,
anticipate or imply future results, performance, events or achievements.  When
used or incorporated by reference in this 10-Q Report or in other written or
oral statements, the words "anticipate," "believe," "estimate," "expect,"
"project," and similar expressions are intended to identify forward-looking
statements.  Such statements are subject to certain risks, uncertainties and
assumptions.  Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated, expected or projected.  For
example, actual results could materially differ from those projected as a result
of factors such as, but not limited to: general economic conditions in the
United States and Southern California; the impact of federal, state, and local
laws and regulations on the Company's development activities; the impact of
weather on the Company's environmental clean-up related activities; the
discovery of unanticipated environmental conditions on any of the Company's
properties; the failure of the bankruptcy discharge granted to the Company to
address claims and litigation that relate to the pre-bankruptcy activities of
Kaiser Steel Corporation; the failure, in whole or in part  of the Company's
business plans to, develop, sell or otherwise deal with any major asset of the
Company such as the failure to sell the Company's Mill Site real estate on terms
substantially similar to the terms proposed in the Ontario Ventures I, LLC
transaction; the success of any material litigation involving the Company and
its projects such as legal challenges to the completed federal land exchange for
the proposed Eagle Mountain landfill project or the threatened litigation
against the Company and current and past members of the Board of Directors in
connection with the purchase by the Company of a substantial number of shares of
Company stock from the New Kaiser Voluntary Employees' Beneficiary Association
and the Pension Benefit Guaranty Corporation; and/or the impact of competition
on the marketing of the Eagle Mountain landfill project.  The risks included
herein are not exhaustive.  Other sections of this 10-Q Report include
additional factors that could adversely impact the Company and its projects.
Readers are cautioned not to put undue reliance on forward-looking statements as
a prediction of future actual results.  The Company disclaims any intention to
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.


                            ADDITIONAL INFORMATION

     A reader of this Form 10-Q Report is strongly encouraged to read the entire
report, together with the Company's 1999 Form 10-K Report, as amended, for
background information and a complete understanding as to material developments
and risks concerning the Company.

                                       1
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                     KAISER VENTURES INC. AND SUBSIDIARIES

                                 INTRODUCTION

BUSINESS UPDATE

General

     Kaiser Ventures Inc. ("Kaiser" or the "Company", including its wholly-owned
subsidiaries unless otherwise provided herein) is an asset development company
pursuing project opportunities and investments in water resources, property
redevelopment, and solid waste management.  The Company's current emphasis is on
its remaining principal assets:  (i) a 53.71% interest in Fontana Union Water
Company ("Fontana Union"), a mutual water company; (ii) approximately a 75%
interest in Mine Reclamation Corporation ("MRC"), the developer of the Eagle
Mountain Landfill Project (the "Landfill Project"); (iii) the 9,144 acre idle
iron ore mine in the California desert (the "Eagle Mountain Site"), which
includes the associated 1,100 acre town of Eagle Mountain ("Eagle Mountain
Townsite") and the land leased to MRC for the Landfill Project; (iv) a 50% joint
venture interest in the West Valley MRF ("WVMRF"), a transfer station and
recycling facility located on land acquired from the Company; and (v)
approximately 634 acres (gross) of the former Kaiser Steel Corporation ("KSC")
steel mill site (the "Mill Site Property"), most of which is currently in escrow
under a sales contract

Investment in Fontana Union Water Company

     The Company, through a wholly-owned subsidiary, Fontana Water Resources,
Inc., currently owns approximately 53.71% of the capital stock of Fontana Union,
a mutual water company. In March 2000, the Company purchased additional shares
in Fontana Union which increased its ownership interest from 50.88% to 53.71%.
The original 50.88% ownership interest in Fontana Union is leased to Cucamonga
pursuant to a 102-year take-or-pay lease expiring in 2092 (the "Cucamonga
Lease"). The newly purchased shares are not leased to Cucamonga under the terms
of the Cucamonga Lease. Currently, the Company's pro rata interest in unclaimed
water raises its effective interest in Fontana Union to 56.13%. Under the terms
of the Cucamonga Lease, Cucamonga's payments to the Company are based upon
established fixed quantities of water for most of the applicable sources,
multiplied by a fixed percentage of a water rate from the Metropolitan Water
District of Southern California ("MWD") as available through the Chino Basin
Municipal Water District as it may change from time-to-time (the "Lease Rate").

     As a result of changed rates and a new rate structure implemented by MWD as
of July 1, 1995, the Company and Cucamonga became involved in a rate dispute
under the terms of the Cucamonga Lease. After a trial held in March 1998, the
San Bernardino County Superior Court concluded that the rate on which the
Cucamonga Lease had been based was discontinued effective July 1, 1995. The
terms of the Cucamonga Lease require the parties to negotiate, in good faith, a
new substitute rate, however, the parties were not able to negotiate a new
substitute rate. As a result, the Superior Court ordered that, since the parties
were at an impasse, the new substitute rate was to be resolved by a reference
proceeding as required by the terms of the Cucamonga Lease. The reference
proceeding commenced during the week of February 28, 2000. After the conclusion
of all the testimony, the reference judge ordered the parties to each submit a
final brief (which have been submitted) and the holding of final oral argument
on May 15, 2000. A decision in the matter is anticipated within approximately 60
days after the final oral argument. There can be no assurance that the Company
will be successful in this portion of the rate dispute litigation with
Cucamonga.

     MWD is again in the process of evaluating and considering a major rate
restructuring.  Several alternatives are being proposed.  It is anticipated that
MWD will discontinue its current rate system and adopt a new rate system in
2000.

                                       2
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                     KAISER VENTURES INC. AND SUBSIDIARIES



There is a proposed settlement that addresses the litigation commenced by the
Company's wholly owned subsidiary, Fontana Water Resources, Inc., against San
Bernardino County with regard to water quality and quantity concerns arising
from San Bernardino County's Mid-Valley Sanitary Landfill and its proposed
expansion. The proposed settlement is still subject to completion of the final
documentation and the approval of the San Bernardino County Board of
Supervisors.

The Mill Site Property

     Sale of the Mill Site Property.  The Company still owns approximately 634
acres (gross) of the former Kaiser Steel Corporation mill site.  In October
1999, the Company and its wholly owned subsidiary, Kaiser Steel Land
Development, Inc., entered into a Purchase and Sale Agreement and Joint Escrow
Instructions (the "Purchase Agreement") with Ontario Partners I, LLC (the
"Buyer") pursuant to which the Company agreed to sell approximately 592 acres of
its remaining Mill Site Property for $16 million in cash plus the assumption of
virtually all known and unknown environmental obligations and risks associated
with the property.  The sale includes the proposed Kaiser Commerce Center with
its proposed truck stop and the East Slag Pile Property, as well as ancillary
items such as the water rights associated with the property.  As part of the
transaction, the Buyer will provide environmental insurance coverage and other
financial assurance mechanisms related to the known and unknown environmental
obligations and risks associated with the property being sold.  In addition, the
Purchase Agreement provides that, to the extent possible, the Company's Consent
Order with the California Department of Toxic Substances Control ("DTSC") will
be terminated and that the Buyer will enter into a new Consent Order with the
DTSC.  The Buyer is currently negotiating a new Consent Order with the DTSC.
Recently, the DTSC has raised new procedural issues with regard to the closure
of the environmental remediation at this former mill site.  This, among other
reasons, could cause a delay in the completion of Buyer's due diligence and of
the anticipated closing of the sale of the property.

     As previously disclosed, the Buyer is a new entity formed by LandBank
Environmental Properties, LLC ("LandBank") and the Knowlton Group, a Salt Lake
City based developer.  LandBank, a wholly owned subsidiary of the IT Group,
specializes in the acquisition, restoration and redevelopment of environmentally
impaired real estate.  It is currently anticipated that a new entity will be
formed in which LandBank, the Knowlton Group and one or more other companies
will become members and that such new entity will ultimately be the buyer of the
real estate if it closes.  The Buyer has currently identified and is working
with Catellus Development Corporation as its most likely additional development
and financial partner.

     The transaction is subject to extensive due diligence and a number of
contingencies. The Buyer, along with Catellus Development Corporation, have been
engaged in, and continue to undertake, extensive due diligence with respect to
the property, including, among other things, environmental, geo-technical,
development, construction, and market matters. The Buyer may terminate the
transaction for any reason prior to the close of its due diligence period. The
Purchase Agreement has been amended to allow Buyer additional time in which to
conduct its due diligence and to complete its negotiations with the DTSC. The
contingency period has been extended into the second quarter of 2000. If the
Buyer is satisfied with the results of its due diligence and all other
contingencies are resolved, such as the negotiation of the final terms of
certain exhibits to the Purchase Agreement, the transaction is currently
scheduled to close in the Summer of 2000. In addition, given the due diligence
to be undertaken by the Buyer and the contingencies involved, there can be no
assurance that the transaction will be ultimately consummated or, if
consummated, that it will close under the current terms set forth in the
Purchase Agreement.

                                       3
<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES

     Assuming that the Mill Site Property transaction closes on its current or
substantially similar terms, the Company intends to provide for a distribution
of cash to all stockholders.  For additional information, please see Part I.
Item 1.  "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Section 3.  Business Outlook" and Item 5.  "Other
Information."

     Rancho Cucamonga Parcel. The Company is continuing to negotiate for the
sale of the remaining 37 acres, known as the Rancho Cucamonga property. There is
no assurance that the negotiations for this property will ultimately lead to a
sale of the property.

     Environmental.  During the first quarter of 2000 the Company continued its
environmental remediation activities.  A significant amount of time is also
being spent in assisting the proposed Buyer of the Mill Site Property in its due
diligence regarding the known environmental conditions at the former steel mill
site, in dealing with the DTSC and in reviewing and commenting on Buyer's
proposed environmental financial assurances such as the proposed insurance
policies, performance bonds and a fixed-price remediation contract.  Of
particular significance, on May 2, 2000, the DTSC accepted the results of a
field test of a solidification remediation alternative for the tar pits located
on a parcel owned by the Company.  By accepting the results of the field test,
the DTSC tentatively concluded that solidification is an acceptable means of
addressing the primary environmental concern associated with the tar pits
parcel.  However, because the DTSC's conclusion is tentative, there can be no
assurance that a capping strategy will be ultimately approved for the tar pits
parcel.

Waste Management

West Valley Materials Recovery Facility

     The Company, through a wholly-owned subsidiary, and Burrtec Waste
Industries, Inc., also through a wholly-owned subsidiary, each own a fifty
percent (50%) interest in West Valley MRF, LLC, a limited liability company that
owns the West Valley MRF. Phase 1 of the West Valley MRF includes a 62,000
square foot building, sorting equipment, and related facilities for waste
transfer and recycling services. The West Valley MRF currently receives and
processes approximately up to approximately 2,000 tons per day of non-hazardous
commercial and municipal solid waste. Waste is primarily received from
jurisdictions in which Burrtec affiliated companies have hauling contracts, and
from the city of Ontario. However, with the closure of the Spadra regional
landfill located in Pomona operated by the Los Angeles Sanitation District in
April 2000, the West Valley MRF has begun to receive additional waste from the
cities of Claremont, Chino, Chino Hills and Pomona.

     Given the current volumes of waste being handled by the West Valley MRF,
construction of Phase 2 of the West Valley MRF is underway.  Phase 2 would
expand the processing capacity of the West Valley MRF from approximately 2,000
tons per day to approximately 3,5000 tons per day.  Phase 2 involves
constructing an approximately 80,000 square foot addition to the existing
facilities, the acquisition and installation of certain related equipment,
including rolling stock, and the rehabilitation and relocation of the certain
existing equipment.  The estimated cost of the expansion is currently
approximately $9.5 million.  It is anticipated that the expansion will be
completed by no later than the end of 2000.

     Like Phase 1, much of the financing for Phase 2 is anticipated to be
obtained through the issuance and sale of $8,5000,000 in California Pollution
Control Financing Authority Variable Rate Demand Solid Waste Disposal Revenue
Bonds (the "Bonds"). The West Valley MRF has been approved to receive such
financing. This anticipated tax-exempt financing will be secured by a pledge and
lien on loan payments made by the West Valley MRF, LLC and funds that may be
drawn on an irrevocable direct pay letter of credit issued by Union Bank of
California. Like the Phase 1 financing, the Company and Burrtec will each be
liable for 50% of the principal and interest on the Bonds in the event of their
default. Closing on this tax-exempt financing is anticipated by the end of

                                       4
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                     KAISER VENTURES INC. AND SUBSIDIARIES

May 2000. The balance of the necessary construction funds of approximately $1
million will be funded out of the cash West Valley MRF, LLC has on hand.

Eagle Mountain Landfill Project

     In 1988, the Company entered into a 100-year lease agreement (the "MRC
Lease") with MRC. MRC is seeking to develop the Company's former iron ore mine
near Eagle Mountain, California into a large, regional rail-haul, municipal
solid waste landfill. MRC became a subsidiary of the Company when the Company's
subsidiary, Eagle Mountain Reclamation, Inc., acquired a 70% interest in MRC
during the first quarter of 1995 in exchange for the elimination of the minimum
monthly rent due the Company under the MRC Lease. The elimination of the minimum
monthly rent did not change the future royalty payments due the Company once the
landfill commences operations. As a result of a series of private placements,
the Company's interest in MRC is now approximately 75%.

     Landfill Project Litigation.  During 1999 a number of events occurred with
regard to the Landfill Project that ultimately resulted in the Landfill
Project's receipt of its last major permit.  These events included, but were not
limited to:  the May 2000 Court of Appeal decision completely reversing the San
Diego Superior Court's prior adverse decision on the Landfill Project's
environmental impact report; the rejection by the California Supreme Court in
July 2000, of a request by Landfill Project opponents to review and overturn the
Court of Appeal's decision; the Interior Board of Land Appeal's ("IBLA")
decision in September 2000 upholding the decision of the U.S. Bureau of Land
Management ("BLM") to engage in a land exchange with the Company; the completion
of the federal land exchange in October 2000; and the issuance of the facilities
permit, the last major permit for the Landfill Project, by the California
Integrated Waste Management Board in December 1999.

     Despite these successes in 1999, opposition to the Landfill Project
continues. Subsequent to the completion of the federal land exchange, two
lawsuits were filed challenging the land exchange and requesting its reversal.
To date, no immediate injunctive relief has been sought. These two lawsuits
generally involve the same parties that were the plaintiffs in the unsuccessful
state environmental impact report litigation and the unsuccessful appeals before
the IBLA. It is anticipated that these two lawsuits filed in the Federal
District Court located in Riverside, California will be consolidated. The
litigation is in its preliminary stages.

     Marketing of the Landfill Project and Competition.  With the Landfill
Project's receipt of its last major permit in December 1999, MRC renewed its
efforts with regard to making rail-haul landfills a reality and in marketing the
Landfill Project to both private and public municipal waste entities.  As
previously disclosed, in the fourth quarter of 1999 the Los Angeles Sanitation
District (the "District") publicly stated that it has an interest in pursuing a
possible transaction, including a possible purchase transaction, with respect to
the Landfill Project and/or with respect to the competing Mesquite Regional
Landfill Project.  Given this public statement, and the current status of
private waste industry, MRC has focused its marketing activities on the
District.  During the first quarter, MRC had several discussions concerning a
possible transaction with the District.  These discussions are currently
continuing on a regular basis.  The Company is aware that the Mesquite Regional
Landfill Project, a competing rail haul project, is also having discussions with
potential customers, including the District.  The competition represented by
Mesquite and other landfill alternatives has and will continue to impact MRC's
discussions with the District.  While discussions are currently ongoing between
the District and MRC, there is no assurance that such discussions will
ultimately lead to an agreement with the District with regard to the Landfill
Project or the timing or terms of any agreement if one is ultimately negotiated.

     Risks. As is discussed in more detail in the Company's 1999 Form 10-K
Report, there are numerous risks associated with MRC and the Landfill Project
which must be overcome to achieve the financing,

                                       5
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                     KAISER VENTURES INC. AND SUBSIDIARIES

permitting, construction, opening, and operation of the Landfill Project. There
have been and will continue to be opponents to the Landfill Project. Given the
legal challenges that have occurred to date, the current legal challenges
involving the completed federal land exchange, and the controversies that
generally surround landfill projects, continuing legal challenges are likely. In
addition, the Landfill Project faces competition from a variety of sources,
including the competing Mesquite rail-haul landfill project to be located in
Imperial County, California. As discussed above, the competition represented by
the Mesquite project may materially adversely impact the chances of the Landfill
Project's success and will affect the terms and conditions in which a possible
transaction could be completed. There is no assurance that the Landfill Project
will be ultimately operational, or of the timing or the terms of any transaction
involving the Landfill Project.


Item 1.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

                         Section 1:  Operating Results

General

     As discussed above, Kaiser Ventures Inc. ("Kaiser" or the "Company") is an
asset development company pursuing project opportunities and investments in
water resources, property redevelopment, and solid waste management.

Primary Revenue Sources

Ongoing Operations

     The Company's revenues from ongoing operations are generally derived from
the development of the Company's long-term projects. Revenues from water
resources represent payments under the lease of the Company's interest in
Fontana Union to Cucamonga. Property redevelopment revenues primarily reflect
revenues from long-term redevelopment activities at the Mill Site Property,
including water and waste water treatment revenues; housing rental income,
aggregate and rock sales, and lease payments for the minimum security prison at
the Eagle Mountain Townsite; and royalty revenues from iron ore shipments from
the Company's iron ore mine in California (the "Silver Lake Mine"). Income from
equity method investments reflect Kaiser's share of income related to those
equity investments (i.e., PMI through March 31, 1999) and joint ventures (i.e.,
West Valley MRF) which the Company accounts for under the equity method.

Interim Activities

     Revenues from interim activities are generated from various sources
primarily related to the Mill Site Property. Significant components of interim
activities include rentals under short-term tenant lease arrangements, royalty
revenues from the sale of slag to outside contractors, royalty revenues from the
sale of recyclable revert materials and other miscellaneous short-term
activities. Revenues from these activities have declined materially as the
redevelopment of the remaining Mill Site property proceeds.

Summary of Revenue Sources

     Due to the developmental nature of certain Company projects and the
Company's recognition of revenues from bankruptcy-related and other non-
recurring items, historical period-to-period comparisons of total revenues are
not meaningful for developing an overall understanding of the Company.

                                       6
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                     KAISER VENTURES INC. AND SUBSIDIARIES

Therefore, the Company believes it is important to evaluate the trends in each
components of its revenue sources as well as the recent developments regarding
its long-term ongoing and interim revenue sources. See "Part I, Item 1. -
Business" for a discussion of recent material events affecting the Company's
revenue sources.

Results of Operations

Analysis of Results for the Quarters Ended March 31, 2000 and 1999

     An analysis of the significant components of the Company's resource
revenues for the quarters ended March 31, 2000 and 1999 follows:

<TABLE>
<CAPTION>
                                                                    2000             1999          % Inc. (Dec)
                                                                    ----             ----          ------------
        <S>                                                     <C>               <C>              <C>
        Ongoing Operations
           Water resource...................................    $1,155,000        $1,180,000               (2%)
           Property redevelopment...........................       386,000           356,000                8%
           Income (loss) from equity method
             investments
                  Penske Motorsports Inc....................           ---          (329,000)             N/A
                  West Valley MRF, LLC......................       329,000               ---              N/A
                                                                ----------        ----------         --------

               Total ongoing operations.....................     1,870,000         1,207,000               55%
                                                                ----------        ----------         --------

        Interim Activities
           Lease, service and other.........................        87,000            67,000               30%
                                                                ----------        ----------         --------

               Total resource revenues......................    $1,957,000        $1,274,000               54%
                                                                ==========        ==========         ========

        Revenues as a Percentage of Total
        Resource Revenues:
           Ongoing operations...............................            96%               95%
           Interim activities...............................             4%                5%
                                                                ----------        ----------

               Total resource revenues......................           100%              100%
                                                                ==========        ==========
</TABLE>


     Resource Revenues. Total resource revenues for the first quarter of 2000
were $1,957,000, compared to $1,274,000 for 1999. Revenues from ongoing
operations increased 55% for the quarter to $1,870,000 from $1,207,000 in 1999,
and revenues from interim activities increased 30% to $87,000 from $67,000 in
1999. Revenues from ongoing operations as a percentage of total revenues
increased to 96% in 2000 from 95% in 1999.

     Ongoing Operations. Water lease revenues under the Company's 102-year
take-or-pay lease with Cucamonga were $1,155,000 during the first quarter of
2000 compared to $1,180,000 for 1999. The 2% decrease in water revenues during
the quarter reflects an increase in the number of Fontana Union shareholders
taking water, which reduced the Company's effective interest in Fontana Union
from 57.33% to 56.13%.

     Property redevelopment revenues were $386,000 for 2000 compared to $356,000
for 1999.  The 8% increase from 1999 is primarily the result of a 36% increase
in iron ore royalty revenues ($21,000).

                                       7
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                     KAISER VENTURES INC. AND SUBSIDIARIES

     Income (loss) from equity method investments increased by $658,000 due to
equity income from the WVMRF of $329,000 recorded for the first quarter of 2000
compared to an equity loss of $329,000 recorded for PMI in 1999.

     Interim Activities. Revenues from interim activities for the first quarter
of 2000 were $87,000 compared to $67,000 for 1999. The 30% increase in revenues
from interim activities in 2000 is attributable to the sale of miscellaneous
assets located at Eagle Mountain ($10,000) and an increase in net railroad
switching revenues at the Mill Site ($10,000).

     Resource Operating Costs.  Resource operating costs are those costs
directly related to the resource revenue sources. Total resource operating costs
for the first quarter of 2000 increased to $721,000 from $615,000 in 1999.
Operations and maintenance costs for 2000 were $209,000 compared to $218,000 for
1999. The 4% decrease in 2000 operations and maintenance costs was primarily due
to lower maintenance and supplies costs for buildings and equipment at the Mill
Site ($9,000). Administrative support expenses for the first quarter of 2000
increased 29% to $512,000 from $397,000 for 1999. This increase was primarily
due to an increase in outside legal costs associated with the CCWD lease rate
dispute ($110,000) in 2000.

     Corporate General and Administrative Expenses.  Corporate general and
administrative expenses for the first quarter of 2000 decreased 5% to $843,000
from $882,000 for 1999.  The decrease is primarily due to lower payroll and
related expenses ($18,000) and lower professional and outside consulting
expenses ($21,000).

     Net Interest Income (Expense).  Net interest income for the first quarter
of 2000 was $108,000 compared to net interest expense of $319,000 in 1999. The
change was due primarily to: (a) a decrease in interest expense ($272,000)
associated with long term debt which was fully paid-off in December 1999; (b) an
increase in interest income ($123,000) due to higher cash and investment
balances; and (c) a decrease in loan fee amortization expense ($33,000).

     Pre-Tax Loss and Income Tax Provision.  The Company recorded income before
income tax provision of $501,000 for the first quarter of 2000, versus a loss of
$542,000 recorded in 1999. An income tax provision of $201,000 was recorded in
the first quarter of 2000 compared with a $215,000 tax benefit in 1999, based on
taxable income or loss for the respective periods.

     Net Income (Loss).  For first quarter of 2000, the Company reported a net
income of $300,000, or $.05 per share, versus a net loss of $327,000, or $.03
per share, reported for 1999.

                        Section 2:  Financial Position

     Cash, Cash Equivalents and Short-Term Investments.  The Company defines
cash equivalents as highly liquid debt instruments with original maturities of
90 days or less. Cash and cash equivalents decreased $4,871,000 to $9,815,000 at
March 31, 2000 from $14,686,000 at December 31, 1999. Included in cash and cash
equivalents is $2,918,000 and $3,474,000 held solely for the benefit of MRC at
March 31, 2000 and December 31, 1999, respectively. The decrease in cash and
cash equivalents is primarily due to: (a) the payment of $3,640,000 for 1999
income taxes; (b) $1,150,000 in capital expenditures; (c) $654,000 used to
purchase 424 additional shares of Fontana Union Water Company stock; and (d)
payment of $249,000 in environmental remediation costs. These decreases were
partially offset by equity funding from the MRC minority partners of $416,000
and the issuance of common stock relating to the exercise of stock options of
$455,000.

                                       8
<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES

     Working Capital.  During the first quarter of 2000, current assets
decreased $5,502,000 to $11,554,000 while current liabilities decreased
$4,644,000 to $7,242,000. The decrease in current assets resulted primarily from
the $4,871,000 decrease in cash and cash equivalents, most of which was used to
pay income taxes, and a $631,000 decline in net accounts receivable. The
decrease in current liabilities resulted primarily from the payment of income
taxes and decreases in liabilities associated with the permitting of the Eagle
Mountain landfill and environmental remediation at the Mill Site. Included in
current liabilities as of March 31, 2000 is $568,000 in accounts payable and
accrued liabilities relating to MRC. As a result, working capital decreased
during the first quarter of 2000 by $858,000 to $4,312,000 at March 31, 2000.

     Real Estate.  Real Estate increased $89,000 during the first quarter of
2000 due to continuing redevelopment of the Mill Site properties.

     Investments.  There was a $329,000 increase in the Company's investment in
the WVMRF during the first quarter of 2000 due to the Company's recording of its
equity share of income during the period. The $504,000 increase in the Company's
investment in FUWC is due to the purchase of 424 shares of FUWC stock from
Western Water Company during the quarter. The purchase price of these 424 shares
was $654,000 in cash, partially reduced by the elimination of a commission
liability of $150,000 due to Western Water Company. This purchase raised the
Company's equity ownership in FUWC from 50.88% to 53.77%.

     Other Assets.  The increase in other assets ($798,000) is primarily related
to: (a) capitalized landfill permitting and development costs incurred by MRC
($915,000) and capital improvements at Eagle Mountain ($37,000). These increases
were partially offset by an increase in accumulated depreciation as of March 31,
2000 ($107,000) and a decrease in notes receivable ($27,000).

     Environmental Remediation.  The Company estimates, based upon current
information, that its future remediation and other environmental costs for the
balance of its land and related matters, including groundwater and other
possible third party claims, will be between approximately $15.8 million and
$26.2 million, depending both upon the ultimate extent of the environmental
remediation and clean-up effort involved and which approved remediation
alternatives are eventually selected.

     As of March 31, 2000, the total short-term and long-term environmental
liabilities including remediation reflected on the Company's balance sheet were
approximately $26.2 million, the high end of the probable range of future
remediation and other environmental costs, which declined from the $26.4 million
as of December 31, 1999.  The decrease is a result of approximately $218,000 in
remediation and other environmental costs incurred in the first quarter of 2000
on the Mill Site property.

     Although ongoing environmental investigations are being conducted on the
Mill Site Property and management believes it is currently in a position to
estimate with some reasonable certainty future investigation and remediation
costs, there can be no assurance that the actual amount of environmental
remediation expenditures to be incurred will not substantially exceed those
currently anticipated or that additional areas of contamination may not be
identified. Accordingly, future facts and circumstances could cause these
estimates to change significantly. In addition, under the terms of the proposed
sale of virtually all the Mill Site Property, all environmental liabilities,
with limited exceptions, will be assumed by the buyer of the property.

     Long-term Liabilities.  The $309,000 decrease in other long-term
liabilities is primarily due to the reduction of the environmental remediation
liability as a result of $218,000 in environmental remediation undertaken during
the first quarter of 2000 and a decrease of $91,000 in other long term
liabilities.

                                       9
<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES

     Minority Interest and Other Liabilities. As of March 31, 2000, the Company
has recorded $5,188,000 of minority interest relating to the approximately 26%
ownership interest in MRC the Company does not own.

     Contingent Liabilities.  The Company has contingent liabilities more fully
described in the notes to the financial statements.

                         Section 3:  Business Outlook

     The statements contained in this Business Outlook are based upon current
operations and expectations.  In addition to the forward-looking statements and
information contained elsewhere in this 10-Q Report, these statements are
forward-looking and, therefore, actual results may differ materially.

     On-Going Operations.  As noted above, the Company's revenues from ongoing
operations are generally derived from the development of the Company's major
long-term projects and investments. The development of a number of these
projects and investments, such as the 102-year take-or-pay lease with Cucamonga,
and the 50% equity ownership of the West Valley MRF, are essentially complete
and the Company is recognizing significant revenues and income from these
investments. The Company anticipates revenues from these projects and
investments to increase moderately over time as certain key economic factors
impacting these projects and investments increase. In addition, the Company
continues to evaluate these completed projects and investments in light of how
to best provide maximum value to its shareholders.

     In regard to the lease with Cucamonga, the most significant economic factor
affecting future water lease revenues is likely to be adjustments in the MWD
rate for untreated and non-interruptible water as available through the Chino
Basin Municipal Water District (now called Inland Empire Utilities Agency (the
"Lease Rate") upon which the lease payments are currently calculated. The MWD
rate established for untreated, non-interruptible water is based on a number of
factors, including MWD's need for funds to finance capital improvements and to
cover large fixed overhead costs. After increasing at an average of around 8%
per year during the past 25 years, MWD is projecting that the MWD rate for
untreated, non-interruptible water, including all of the changed rates and
charges implemented by MWD since July 1, 1995, will likely increase at less than
5.0% per year for the next 2-4 years. This reduction is due to a reduced capital
budget, lower overhead, lower borrowing costs and reduced levels of inflation.
Also affecting the Company's future water lease revenues is the dispute with
Cucamonga regarding the calculation of the Lease Rate. In March 1998, the San
Bernardino Superior Court ruled that the Lease Rate had been discontinued as of
July 1, 1995. Therefore, the terms of the Cucamonga Lease require the parties to
seek to negotiate in good faith a new substitute rate. If the parties are unable
to agree on a substitute rate, the matter is to be resolved by reference, a form
of private trial similar to arbitration. Before and after the trial, there were
sporadic attempts to resolve the litigation and negotiate a new substitute rate.
However, since the parties were not able to reach a resolution of the matter,
the matter will be determined as a result of a reference proceeding as required
under the terms of the Cucamonga Lease. The reference proceeding commenced
during the week of February 28, 2000. After the conclusion of all the testimony
in the proceeding, the court asked for further briefing and scheduled a final
oral argument which is currently scheduled for May 15, 2000. A decision from the
judge is expected within 60 days thereafter.

     With regard to the Company's investment in Fontana Union, the Company
purchased, in March 2000, an additional 424 shares of Fontana Union from Western
Water Company for approximately $504,000.  This purchase raised the Company's
equity ownership in FUWC from 50.88% to 53.77%.  The price per share reflects a
substantial minority discount and also reflects the resolution of a legal
dispute between the seller of the shares and the Company.  The purchase of these
additional shares,

                                       10
<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES

which are not covered by the take-or-pay lease with Cucamonga, will assist in
protecting the Company's effective interest in Fontana Union, which is utilized
in calculating the revenue under the take-or-pay lease with Cucamonga.

     In regard to the WVMRF, the most significant factor affecting the Company's
future equity income from the WVMRF is the expansion of the facility's capacity
from 2,000 to 3,500 tons per day.  This expansion, which will cost approximately
$9.5 million and is anticipated to be completed in the fall of 2000, will
increase the processing facility by an additional 80,000 square feet and will
provide for additional materials recovery sorting capacity.  The success of this
expansion will depend heavily on the continuing closures of local landfills
(such as the Sparda Landfill closed in April 2000), and the future construction,
if any, of competing facilities.  The Company received approval in April 2000,
for the issuance of $8.5 million of tax exempt financing for the expansion from
the California Pollution Control Financing Authority.

     The Company has historically spent a significant amount of capital in the
development of its two other major project and investment opportunities: the re-
permitting of the Eagle Mountain Landfill by MRC, the Company's 75% owned
subsidiary, and the redevelopment of approximately 634 acres (gross) of the
Company's Mill Site Property.  As a result of the litigation successes,
completion of the federal land exchange, and the Landfill Project's receipt of
its last major permit, MRC is accelerating its efforts to make rail-haul
landfills a reality and to market the Landfill Project to both public and
private municipal waste entities.  MRC has had meetings with several
governmental agencies about the possibility of participating in the Landfill
Project through the purchase of air or capacity rights or other similar
arrangements.  These entities include, but are not limited to, the Los Angeles
Sanitation District.  In fourth quarter of 1999, the Los Angeles Sanitation
District publicly stated that it has an interest in pursuing a possible
transaction, including a possible purchase transaction, with respect to the
Landfill Project and/or with respect to the competing Mesquite Regional Landfill
project.  However, even though there are periodic discussions with the Los
Angeles Sanitation District and others, there is no assurance that any
discussions will ultimately lead to an agreement with regard to the Landfill
Project or as to the timing or terms of any agreement if one is ultimately
negotiated.

     In regard to the redevelopment of approximately 634 acres (gross) of the
Mill Site Property, the Company completed the entitlement and permits process
for a substantial portion of the property in April 1999, for a variety of
possible commercial, industrial and recreational uses. In the fourth quarter of
1999, the Company entered into a contract to sell substantially all of its
remaining Mill Site Property to Ontario Ventures I, LLC. Due to the extensive
amount of due diligence and the number of contingencies involved, it is
currently estimated that if this transaction is consummated, it will close in
the Summer of 2000. Based on this potential sale the Company is not currently
spending significant capital on the Mill Site. Should this transaction
ultimately fail to be consummated, it is anticipated that the Company would have
to spend approximately $2.5 million for required environmental remediation and
approximately $500,000 for real estate entitlement and improvement expenditures
over the remainder of 2000. The $2.5 million to be spent in 2000 for required
environmental remediation is a component of the approximately $16-26 million
estimate to complete all remaining required remediation for the Mill Site
Property. As previously disclosed, the Company recorded, in 1999, a write-down
to net realizable value on the Mill Site property in anticipation of this or a
similar transaction closing. As a result, the Company does not anticipate
recognizing a significant gain or loss on the sale of the Mill Site Property.

     Assuming that the Mill Site Property sale transaction closes on its current
or substantially similar terms, the Company intends to provide for a
distribution of cash to all shareholders of a per share amount at least equal to
the per share contingent real estate payment to be made to the New Kaiser
Voluntary Employees' Beneficiary Association and the Pension Benefit Guaranty
Corporation in connection with the Company's purchase of a substantial amount of
their shares in the Company in November 1999.

                                       11
<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES

Based upon the current terms of the proposed transaction with Ontario
Ventures I, LLC, this could be up to $1.10 per share.

     Although neither the Company nor any subsidiary of the Company has any
obligation to invest funds in MRC, the Company has, to date, continued to make
investments in MRC.  Through a series of private placements with existing MRC
shareholders, from July 1995 through December 31, 1999, a total of $18.5 million
has been raised by MRC, with Kaiser contributing approximately $14.0 million of
that amount.  The Company's 1999 advances approximated $3.0 million out of a
total funding of $4.0 million.  The Company has also approved advances to MRC
totaling $1.8 million for 2000, which together with the minority shareholders
advances are anticipated to fund MRC through December 31, 2000.

     Capital Resources.  The Company expects that its current cash balances and
short-term investments together with: (a) cash provided from operating
activities; (b) amounts available under its $30,000,000 revolving-to-term credit
facility (less $4,850,000 reserved for financial assurances required by the DTSC
and relating to environmental remediation on the Mill Site Property) will be
sufficient to satisfy both the Company's near-term operating cash requirements
and to enable the Company to continue to fund the development of its long-term
projects and investments. As was discussed in more detail above, the Company may
commit, in 2000, a total of approximately $5.4 million for capital projects and
investments. To the extent that additional capital resources are required, such
capital will be raised through bank borrowings, partnerships, joint venture
arrangements, additional equity or the sales or monetization of assets.

     Improved Cash Flow from Use of Net Operating Loss Tax Carryforwards.  Due
to the Company's status as successor to KSC and its use of KSC-related NOLs,
income taxes actually paid by the Company are substantially less than the income
tax provision reported in its financial statements. The tax benefit associated
with the utilization of NOLs, if any, has historically been reflected as an
increase to stockholders' equity rather than as an increase to net income. The
Company expects that its use of these NOLs will substantially reduce the cash
paid for income taxes until these NOLs are fully utilized. The total NOLs at
March 31, 2000, are estimated to be approximately $35 million for federal
purposes. These federal NOLs expire in varying amounts over a period from year
2006 to 2013.

     If within a three-year period, 50% or more of the stock of the Company
changes ownership, the future annual use of NOLs may be limited. The annual
limitation would be calculated as the product of: (i) the highest long-term tax-
exempt rate for a designated period prior to the ownership change; and (ii) the
market value of the Company at such time.


Item 2.  FINANCIAL STATEMENTS

               (Remainder of this Page Intentionally Left Blank)

                                       12
<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                                     as of


<TABLE>
<CAPTION>
                                                                      March 31,                December 31,
                                                                       2000                        1999
                                                                    -----------                ------------
                                                                    (Unaudited)
<S>                                                                 <C>                        <C>
ASSETS

Current Assets
   Cash and cash equivalents...............................         $ 9,815,000                $ 14,686,000
   Accounts receivable and other, net of allowance for
       doubtful accounts of $83,000 and $90,000,
       respectively........................................           1,347,000                   1,978,000
   Deferred tax assets                                                  285,000                     285,000
   Note receivable.........................................             107,000                     107,000
                                                                    -----------                ------------

                                                                     11,554,000                  17,056,000
                                                                    -----------                ------------

Investment in Fontana Union Water Company..................          16,612,000                  16,108,000
                                                                    -----------                ------------

Investment in West Valley MRF..............................           3,338,000                   3,009,000
                                                                    -----------                ------------

Real Estate
   Land and improvements...................................           8,543,000                   8,543,000
   Real estate held for sale...............................          38,909,000                  38,820,000
                                                                    -----------                ------------

                                                                     47,452,000                  47,363,000
                                                                    -----------                ------------

Other Assets
   Note Receivable.........................................             673,000                     700,000
   Deferred tax assets.....................................             577,000                     577,000
   Landfill permitting and development.....................          16,715,000                  15,800,000
   Buildings and equipment (net)...........................           2,735,000                   2,805,000
   Other assets............................................               7,000                      27,000
                                                                    -----------                ------------

                                                                     20,707,000                  19,909,000
                                                                    -----------                ------------

Total Assets...............................................         $99,663,000                $103,445,000
                                                                    ===========                ============
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.

                                       13
<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                                     as of

<TABLE>
<CAPTION>
                                                                  March 31,        December 31,
                                                                    2000               1999
                                                                    ----               ----
                                                                 (Unaudited)
<S>                                                           <C>                <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
   Accounts payable.......................................      $   854,000        $    887,000
   Income taxes payable...................................              ---           3,501,000
   Accrued liabilities....................................        3,888,000           4,998,000
   Environmental remediation..............................        2,500,000           2,500,000
                                                                -----------        ------------

                                                                  7,242,000          11,886,000
                                                                -----------        ------------

Long-term Liabilities
   Deferred gain on sale of real estate...................          724,000             724,000
   Accrued liabilities....................................        1,213,000           1,305,000
   Environmental remediation..............................       23,651,000          23,868,000
                                                                -----------        ------------

                                                                 25,588,000          25,897,000
                                                                -----------        ------------

Total Liabilities.........................................       32,830,000          37,783,000
                                                                -----------        ------------

Minority Interest.........................................        5,188,000           4,772,000
                                                                -----------        ------------

Commitments and Contingencies

Stockholders' Equity
   Common stock, par value $.03 per share, authorized
       13,333,333 shares; issued and outstanding
       6,363,953 and 6,316,853 respectively...............          191,000             189,000
   Capital in excess of par value.........................       49,198,000          48,745,000
   Retained earnings......................................       12,256,000          11,956,000
                                                                -----------        ------------

Total Stockholders' Equity................................       61,645,000          60,890,000
                                                                -----------        ------------

Total Liabilities and Stockholders' Equity................      $99,663,000        $103,445,000
                                                                ===========        ============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

                                       14
<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                      for the Three Months Ended March 31
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                2000                1999
                                                                                ----                ----
<S>                                                                    <C>                  <C>
Resource Revenues
 Ongoing Operations
       Water resource...........................................          $1,155,000         $ 1,180,000
       Property redevelopment...................................             386,000             356,000
       Income (loss) from equity method investments
           Penske Motorsports Inc...............................                 ---            (329,000)
           West Valley MRF, LLC.................................             329,000                 ---
                                                                          ----------         -----------

             Total ongoing operations...........................           1,870,000           1,207,000
                                                                          ----------         -----------

 Interim Activities
       Lease, service and other.................................              87,000              67,000
                                                                          ----------         -----------

             Total resource revenues............................           1,957,000           1,274,000
                                                                          ----------         -----------

Resource Operating Costs
 Operations and maintenance.....................................             209,000             218,000
 Administrative support expenses................................             512,000             397,000
                                                                          ----------         -----------

             Total resource operating costs.....................             721,000             615,000
                                                                          ----------         -----------

Income from Resources...........................................           1,236,000             659,000

 Corporate general and administrative expenses..................             843,000             882,000
                                                                          ----------         -----------

Income (Loss) from Operations...................................             393,000            (223,000)

 Net interest (income) expense..................................            (108,000)            319,000
                                                                          ----------         -----------

Income (Loss) before Income Tax Provision.......................             501,000            (542,000)

 Income tax provision (benefit).................................             201,000            (215,000)
                                                                          ----------         -----------

Net Income (Loss)...............................................          $  300,000         $  (327,000)
                                                                          ==========         ===========

Basic Income (Loss) Per Share...................................          $      .05         $      (.03)
                                                                          ==========         ===========

Diluted Income (Loss) Per Share.................................          $      .04         $      (.03)
                                                                          ==========         ===========

Basic Weighted Average Number of Shares Outstanding.............           6,346,000          10,695,000

Diluted Weighted Average Number of Shares Outstanding...........           6,747,000          10,808,000
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

                                       15
<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES


                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                      for the Three Months Ended March 31
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                  2000                1999
                                                               -----------          ----------
<S>                                                            <C>                  <C>
Cash Flows from Operating Activities
   Net income (loss)...................................        $   300,000          $ (327,000)
   (Income) loss from equity method investments........           (329,000)            329,000
   Deferred tax (benefit) expense......................                ---            (222,000)
   Depreciation and amortization.......................            127,000             135,000
   Allowance for doubtful accounts.....................             (7,000)            (49,000)
   Changes in assets:
       Receivables and other...........................            637,000             312,000
   Changes in liabilities:
       Current liabilities.............................           (851,000)            130,000
       Income taxes payable............................         (3,501,000)                ---
       Long-term accrued liabilities...................            (92,000)           (198,000)
                                                               -----------          ----------

   Net cash flows from operating activities............         (3,716,000)            110,000
                                                               -----------          ----------

Cash Flows from Investing Activities
   Minority interest and other liabilities.............            416,000             393,000
   Note receivable collections.........................             27,000              25,000
   Investment in Fontana Union Water Co................           (654,000)                ---
   Capital expenditures................................         (1,150,000)           (692,000)
   Environmental remediation expenditures..............           (249,000)           (577,000)
                                                               -----------          ----------

   Net cash flows from investing activities............         (1,610,000)           (851,000)
                                                               -----------          ----------

Cash Flows from Financing Activities
   Issuance of common stock............................            455,000             128,000
                                                               -----------          ----------

   Net cash flows from financing activities............            455,000             128,000
                                                               -----------          ----------

Net Changes in Cash and Cash Equivalents...............         (4,871,000)           (613,000)

Cash and Cash Equivalents at Beginning of Year.........         14,686,000           3,409,000
                                                               -----------          ----------

Cash and Cash Equivalents at End of Quarter............        $ 9,815,000          $2,796,000
                                                               ===========          ==========
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statements.

                                       16
<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES


          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                   for the Three Months Ended March 31, 2000
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                   Common Stock              Capital In
                                        ---------------------------------    Excess of          Retained
                                              Shares           Amount         Par Value         Earnings            Total
                                        ---------------------------------------------------------------------------------------
<S>                                     <C>                  <C>           <C>               <C>                 <C>
Balance at December 31, 1999                 6,316,853       $ 189,000     $ 48,745,000      $ 11,956,000        $ 60,890,000

   Issuance of shares of
       Common stock.............                47,100           2,000          453,000               ---             455,000

   Net Income...................                   ---             ---              ---           300,000             300,000
                                             ---------       ---------     ------------      ------------        ------------

Balance at March 31, 2000                    6,363,953       $ 191,000     $ 49,198,000      $ 12,256,000        $ 61,645,000
                                             =========       =========     ============      ============        ============
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statements.

                                       17
<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES


                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


Note 1.   BASIS OF PRESENTATION

     The unaudited, consolidated financial statements as of March 31, 2000 and
for the three month periods ended March 31, 2000 and 1999, as well as related
notes, should be read in conjunction with the audited consolidated financial
statements and related notes as of and for the year ended December 31, 1999. In
the opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary (all of which are normal and/or recurring in
nature) to present fairly the Company's financial position at March 31, 2000,
and results of operations and cash flows for the three month periods ended March
31, 2000 and 1999.


Note 2.   CUCAMONGA LEASE

     The Company, through a wholly-owned subsidiary, Fontana Water Resources,
Inc., leases most of its 53.71% ownership of the capital stock of Fontana Union,
a mutual water company, to Cucamonga County Water District ("Cucamonga")
pursuant to a take-or-pay lease (the "Cucamonga Lease") that terminates in the
year 2092. In 1996, the Company instituted litigation against Cucamonga due to a
dispute concerning the amount payable to the Company pursuant to the terms of
the Cucamonga Lease. The dispute centers on the Company's assertion that either
the MWD Rate in the Cucamonga Lease was discontinued on July 1, 1995, or that
the Lease Rate should be interpreted to include all the changed rates and items
implemented by Metropolitan Water District of Southern California ("MWD") since
July 1, 1995. A five-day trial on the matter was held in March 1998. The Court
ruled, in favor of the Company, that the rate on which the Cucamonga Lease had
been based was discontinued effective July 1, 1995. Therefore the terms of the
Cucamonga Lease require the parties to negotiate in good faith a new substitute
MWD rate. To date, the parties have been unable to negotiate a substitute Lease
Rate; consequently, the matter has been submitted to a reference process, which
is a private trial much like arbitration. The reference proceeding commenced
during the week of February 28, 2000. After the conclusion of all the testimony
in the proceeding, the court asked for further briefing and scheduled a final
oral argument which is currently scheduled for May 15, 2000. A decision from the
judge is expected within 60 days thereafter. Cucamonga continues to pay under
the terms of the Cucamonga Lease, but at a rate substantially less than the
Lease Rate that the Company maintains it is entitled to receive pursuant to the
Cucamonga Lease. Although the Company is continuing to bill Cucamonga at what it
believes is the correct MWD rate under the lease with Cucamonga, the Company has
elected to report revenues on the basis of amounts Cucamonga is currently
paying. The total amount of lease payments in dispute as of March 31, 2000 is
approximately $2,735,000.

Note 3.   SUPPLEMENTAL CASH FLOW INFORMATION

     During the three months ended March 31, 1999, the Company issued $61,000 of
common stock for the payment of bonuses. The Company has not issued any common
stock for the payment of bonuses during 2000.

                                       18
<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES



Note 4.  COMMITMENTS AND CONTINGENCIES

Environmental Contingencies

     The Company estimates, based upon current information, that its future
remediation and other environmental costs, including groundwater and other
possible third party claims, will be between approximately $15.8 million and
$26.2 million, depending upon which approved remediation alternatives are
eventually selected.

     Although ongoing environmental investigations are being conducted on the
Company's property, and management believes it is currently in a position to
estimate with some reasonable certainty future investigation and remediation
costs, there can be no assurance that the actual amount of environmental
remediation expenditures and incurred will not substantially exceed those
currently anticipated or that additional areas of contamination may not be
identified.  Accordingly, future facts and circumstances could cause these
estimates to change significantly.  The Company anticipates recovery of the
remediation costs incurred through redevelopment of the property, primarily in
connection with specific redevelopment projects or joint ventures.  Further, the
Company has provided certain financial assurances to the DTSC in connection with
anticipated remediation activities, the primary one being the dedication of
approximately $4.8 million of Kaiser's Union Bank Credit facility.

     While the Company has monitored certain groundwater wells in the past, the
DTSC requested and the Company will implement a supplemental groundwater
monitoring system.  The Company has settled obligations of groundwater
contamination with the California Regional Water Quality Control Board.  The
settlement required a $1,500,000 cash payment by the Company, which was made in
February 1994, and the contribution of 1,000 acre feet of water annually for 25
years to a water quality project.  These water rights are unrelated to those
leased to Cucamonga.  In 1995, the Company contributed 18,000 acre feet of its
water in storage thus, satisfying the first 18 years of its obligation.  In
September 1998, the Company contributed an additional 7,000 acre feet of its
water in storage.  This additional contribution of water completed all of the
Company's obligations under the terms of the settlement agreement approximately
20 years ahead of schedule.  The Company remains contingently liable for any
impacts the groundwater plume may have on water wells owned by third parties.
The City of Ontario, California has commenced litigation against the Company
alleging that the Company has contaminated one of its municipal wells.  The
Company believes sufficient amounts have been accrued for this contingency if it
should arise.


                                    PART II


Item 1.   LEGAL PROCEEDINGS

     As discussed in the Company's Form 10-K Report for 1999, the Company is
engaged in certain claims and litigation.  There were no material developments
in any legal proceeding in the first quarter of 2000 except as noted below:

     Eagle Mountain Landfill Project Litigation.  In January 2000, the second of
two lawsuits was filed challenging the validity of the completed land exchange
between the U.S. Bureau of Land Management and the Company.  National Parks and
Conservation Association v. Bureau of Land Management, et al. (United States
District Court for the Central District of California, Riverside Division, Case
No. EDCV-00-0041 VAX (JWJx)).  It is anticipated that this case will be
consolidated with the case filed in December 1999.  The same general opponents
that lost the appeal before the IBLA have brought these

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                     KAISER VENTURES INC. AND SUBSIDIARIES



latest legal challenges. In sum, plaintiffs argue that the land exchange should
be reversed because the BLM failed to comply with the National Environmental
Policy Act and the Federal Land Management Policy Act. The Company believes the
challenges are without merit.

     For additional information on the Landfill Project litigation, see
"Introduction - Business Update - Waste Management - Eagle Mountain" of this 10-
Q Report, as well as the Company's 1999 10-K Report.

     Cucamonga Litigation.  In 1996, the Company initiated legal action against
Cucamonga as a result of dispute over the amount owed to the Company under the
terms of its lease of Fontana Union Water stock to Cucamonga.  Since the parties
were unable to negotiate a new substitute rate, the Cucamonga Lease requires
that the matter be resolved in a reference proceeding.  A reference proceeding
is in effect a private trial.  During the week of February 28, 2000, all the
testimony in the reference proceeding was presented.  The judge requested
further briefing and a final oral argument which is currently scheduled for May
15, 2000.  The decision in the matter is anticipated within approximately 60
days following the closing argument.  For more additional information, please
see "Introduction - Business Update - Investment in Fontana Union Water
Company."

     Willow Creek Shareholder Litigation. In December 1999, the Company was
served with a complaint challenging and seeking damages in connection with a
transaction completed on November 22, 1999, pursuant to which the Company
purchased a substantial portion of its common stock from The New Kaiser
Voluntary Employees' Beneficiary Association ("VEBA") and the Pension Benefit
Guaranty Corporation ("PBGC"). Willow Creek Capital Partners, L.P. a Delaware
limited partnership; and Willow Creek Offshore, v. Kaiser Ventures Inc. et al.
(United States District Court, Northern District of California, Case No. C99
5188 SBA). A shareholder of the Company initiated the litigation, but the matter
was not a class action lawsuit. On March 9, 2000, this federal lawsuit was
voluntarily dismissed, without prejudice, by the plaintiffs. It is the Company's
understanding that the plaintiffs intend to file a new lawsuit in California
State Court, although, to the Company's knowledge, no new lawsuit has been filed
as of the date of this 10-Q Report.

Item 2.   CHANGES IN SECURITIES

          None.


Item 3.   DEFAULTS UPON SENIOR SECURITIES

          Not applicable.


Item 4.   SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

          On May 10, 2000, the Company held its annual meeting of stockholders.
          The only actions taken by the stockholders were a vote on the election
          of seven directors for the Company for the ensuing year and on the
          Company's 2000 Stock Plan. The stockholders re-elected the current
          seven members of the Board of Directors. The vote on each nominee to
          the Board was as follows:

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<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES


          ----------------------------------------------------------------
          Election to the Board of                              Votes
             Directors Votes for            Votes For          Withheld
          ----------------------------------------------------------------
          ----------------------------------------------------------------
           Ronald E. Bitonti                4,090,567           917,249
          ----------------------------------------------------------------
           Todd G. Cole                     4,091,121           916,695
          ----------------------------------------------------------------
           Gerald A. Fawcett                3,933,148         1,074,668
          ----------------------------------------------------------------
           Reynold C. MacDonald             4,087,653           920,163
          ----------------------------------------------------------------
           Charles E. Packard               4,091,453           916,363
          ----------------------------------------------------------------
           Richard E. Stoddard              4,091,553           916,263
          ----------------------------------------------------------------
           Marshall F. Wallach              4,115,393           892,423
          ----------------------------------------------------------------

     While the Company's 2000 Stock Plan was approved by a majority of the
shareholders specifically voting on the Plan, it was not approved by the
required vote of a majority of the shares represented in person and by proxy at
the meeting.  Accordingly, the 2000 Stock Plan failed to be approved by less
than 60,000 votes.  The vote on the 2000 Stock Plan was as follows:

     ---------------------------------------------------------------------------
     Votes For         Votes Against       Abstained/1/      Broker Non-Votes/1/
     ---------------------------------------------------------------------------
     2,445,038           1,083,769          409,578              1,069,431
     ---------------------------------------------------------------------------


/1/  Abstentions and broker "non-votes" (i.e., shares held by a broker or
     nominee as to which instructions have not been received from the beneficial
     owners or persons entitled to vote as to a particular proposal) are counted
     as shares that are present and entitled to vote for purposes of determining
     the presence of a quorum. Abstentions and broker "non-votes" have the same
     effect as votes against the proposal.

Item 5.   OTHER INFORMATION

          A.  See the "Introduction" section of this Form 10-Q Report.

          B.  Assuming that the Mill Site Property sale transaction to Ontario
              Ventures I, LLC (or any other party) closes on its current or
              substantially similar terms, the Company intends to provide for a
              distribution of cash to all shareholders of a per share amount at
              least equal to the per share contingent real estate payment to be
              made to the New Kaiser Voluntary Employees' Beneficiary
              Association and the Pension Benefit Guaranty Corporation in
              connection with the Company's purchase of a substantial amount of
              their shares in the Company in November 1999. Based upon the
              current terms of the proposed transaction with Ontario Ventures I,
              LLC, this could be up to $1.10 per share. The closing of the Mill
              Site Property sale transaction will also initiate the process by
              the Company's Board of Directors of designing the overall
              corporate strategy to best allow shareholders to realize maximum
              after tax value from the Company's projects.

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<PAGE>

                     KAISER VENTURES INC. AND SUBSIDIARIES



Item 6.   EXHIBITS AND REPORTS ON FORM 8-K

          A.  Exhibits
              --------

              Exhibit 10.1 - Tenth Amendment to Purchase and Sale Agreement and
              Joint Escrow Instructions among Kaiser Ventures Inc., Kaiser Steel
              Land Development, Inc. and Ontario Ventures I, LLC dated April 20,
              2000.

              Exhibit 27 - Financial Data Schedule for first quarter 10-Q.

          B.  Reports on Form 8-K.
              --------------------

              None.



               (Remainder of this Page Intentionally Left Blank)

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                     KAISER VENTURES INC. AND SUBSIDIARIES



                                   SIGNATURES

     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.

                              KAISER VENTURES INC.



Dated:  May 11, 2000          /s/ James F. Verhey
                              -------------------
                              James F. Verhey
                              Principal Financial Officer

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