<PAGE>

                                                                  Exhibit 10.9.3


                                THIRD AMENDMENT
                                    TO THE
                             EMPLOYMENT AGREEMENT
                                      OF
                                JAMES F. VERHEY

     This THIRD AMENDMENT TO THE EMPLOYMENT AGREEMENT OF JAMES F. VERHEY ("Third
Amendment") is made and entered into as of January 6, 2000, by and between JAMES
F. VERHEY ("Employee") and KAISER VENTURES INC. ("Kaiser").

                                   Recitals
                                   --------

     A.   Employee is currently employed by Kaiser as Executive Vice President-
Finance and Chief Financial Officer and has an existing Employment Agreement
with Kaiser dated effective June 17, 1996, as amended by that certain First
Amendment dated effective January 15, 1998, as further amended by that certain
Second Amendment dated effective October 1, 1999, between Kaiser and Employee
(collectively the "Employment Agreement"); and

     B.   Employee and Kaiser have mutually agreed to the modification of
certain provisions of the Employment Agreement and therefore Employee and Kaiser
desire to amend the Employment Agreement solely as provided herein.

     NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     1.   Amendment of Paragraph 11 of Employment Agreement. Paragraph 11 of the
Employment Agreement is hereby amended as follows:

          (a)  Subparagraph 11.b. Subparagraph 11.b. of the Employment Agreement
               -----------------
     is hereby deleted in its entirety and the following new subparagraph 11.b.
     is substituted therefore:

               "b.  any acquisition of common stock by a person or "group" (as
          defined in section 13(d) of the Securities Exchange Act of 1934),
          resulting in the "beneficial ownership" (as defined in Rule 13d-3
          under the Securities Exchange Act of 1934) by that person or group of
          more than 35% of the capital stock of Kaiser."

          (b)  Subparagraph 11.c. Subparagraph 11.c of the Employment Agreement
               -----------------
     is hereby deleted in its entirety an the following new subparagraph 11.c.
     is substituted therefore:

               "c.  following the date of this Amendment there has been an
          aggregate of net assets with a cumulative value that exceeds the
          greater of (i) $30,000,000 or (ii) 30% of the net equity of Kaiser at
          the time of the distribution (whether by dividend or repurchase of
          stock) distributed to any one or more Kaiser shareholders."

          (c)  Addition of Subparagraphs 11.d. and 11.e. Paragraph 11 of the
               ----------------------------------------
     Employment Agreement is amended by the addition of the following new
     subparagraphs:

                                       1
<PAGE>

               "d.  During any period of two consecutive years, the individuals
          who at the beginning of such period constitute the Board of Directors
          of the Company, cease for any reason, to constitute at least a
          majority thereof, unless the election, or the nomination for election
          by the Company's shareholders, of each new director has been approved
          at the time of such election or nomination by a vote of at least two-
          thirds of the directors then still in office who were directors at the
          beginning of the period; or

               e.  The Board of Directors or any designated committee
          determines, in its sole discretion, that any person (such as that
          term is used in Sections 13(d) and 14(d) of the Exchange Act)
          directly or indirectly exercises a controlling influence over the
          management or policies or the Company."

     2.   Amendment of Paragraph 12 of the Employment Agreement. Subparagraph
12.c. of the Employment Agreement is hereby deleted in its entirety, except for
that portion of the paragraph commencing with "then, at Employee's option---"
and ending with the words "Paragraph 13 below," and the following new portion of
Subparagraph 12.c. is substituted therefor:

               "c.  Any failure to provide Employee with compensation and
          benefits in the aggregate on terms that are materially less favorable
          than those enjoyed by Employee under this Agreement immediately prior
          to a Material Change, or the subsequent taking of any action that
          would materially reduce Employee's compensation and benefits in effect
          at the time of the Material Change."

     3.   Amendment of Paragraph 13 of the Employment Agreement. Paragraph 13 of
the Employment Agreement is hereby amended as follows:

          (a)  Subparagraph 13.a. The phrase "as measured by the preceding
               -----------------
     year's bonus" in subparagraph 13.a. is hereby deleted in its entirety and
     the following new phrase is substituted therefore in Subparagraph 13.a.:
     "as measured by Employee's average percentage bonus over the past five
     years (or such lesser period of time during which Employee was eligible to
     receive a bonus)."

          (b)  Subparagraph 13.b. The phrase in Subparagraph 13.b averaged over
               -----------------
     the two (2) immediately preceding years" is herein deleted and replaced
     with the phrase "as measured by Employee's average percentage bonus over
     the past five years" (or such lesser period of time during which Employee
     was eligible to receive a bonus)."

          (c)  Subparagraph 13.c. The word "will" in Subparagraph 13.c is hereby
               -----------------
     deleted and replaced with the word "with," such that the end of
     Subparagraph 13.c reads "in proportion to shares owned together with all
     other shareholders."

          (d)  Additional Paragraph. Paragraph 13 of the Employment Agreement is
               --------------------
     hereby amended by the addition of the following paragraph at the end of the
     current Paragraph 13.

               "For purposes of this Agreement, "average percentage bonus over
          the past five years" shall mean the average percentage bonus received
          by Employee for the five years preceding the year of termination (or
          for such lesser period in which bonus payments were

                                       2
<PAGE>

          received) as applied to the Employee's current annual base salary," is
          substituted therefore:

     4.   Amendment of Paragraph 16. Paragraph 16 of the Employment Agreement is
hereby amended by deleting the reference to "ninety (90) days" and substituting
therefore "one hundred twenty (120) days."

     5.   Amendment of Paragraph 18. Paragraph 18 of the Employment Agreement is
hereby amended by the addition of the following phrase to the end of the first
sentence of Paragraph 18, "provided, however, Employee shall give a minimum of
ninety (90) days advance written notice."

     6    Ratification of Employment Agreement as Amended. The Employment
Agreement is not amended in any respect except as expressly provided herein, and
the Employment Agreement as amended by this Third Amendment is hereby ratified
and approved in all respects

     7    Governing Law. This Third Amendment shall be governed by and construed
in accordance with the laws of the State of California.

     IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment
to the Employment Agreement to be effective as of the day and year first written
above not withstanding the actual date of signature.



"Employee"                              "Kaiser"
James F. Verhey                         Kaiser Ventures Inc.


/s/ James F. Verhey                     By: /s/ Richard E. Stoddard
---------------------------                 ------------------------------------
James F. Verhey                             Richard E. Stoddard
                                            President & Chief Executive Officer


                                            By:  /s/ Todd G. Cole
                                            ------------------------------------
                                            Todd G. Cole, Chairman of the
                                            Human Relations Committee

                                       3