=================================================================



                          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 QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

                            Commission file number 1-3605




                        KAISER ALUMINUM & CHEMICAL CORPORATION
                (Exact name of registrant as specified in its charter)


                     DELAWARE                          94-0928288
             (State of incorporation)               (I.R.S. Employer
                                                   Identification No.)


               6177 SUNOL BOULEVARD, PLEASANTON, CALIFORNIA 94566-7769
                (Address of principal executive offices)    (Zip Code)


                                    (925) 462-1122
                 (Registrant's telephone number, including area code)







               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
             ------       -------

               At October 15, 1999, the registrant had 46,171,365 shares
          of Common Stock outstanding.





          =================================================================






           KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

                            PART I - FINANCIAL INFORMATION


          ITEM 1.  FINANCIAL STATEMENTS
                    --------------------

                             CONSOLIDATED BALANCE SHEETS
                               (In millions of dollars)

          <TABLE>
          <CAPTION>

                                                                       September 30,    December 31,
                                                                                1999            1998
                                                                      ------------------------------
          <S>                                                         <C>             <C>
                                     ASSETS                             (Unaudited)
          Current assets:
               Cash and cash equivalents                              $         8.6   $        98.3
               Receivables                                                    293.2           288.2
               Inventories                                                    554.2           543.5
               Prepaid expenses and other current assets                      120.7           104.9
                                                                      ------------------------------
                    Total current assets                                      976.7         1,034.9

          Investments in and advances to unconsolidated affiliates             96.5           128.3
          Property, plant, and equipment - net                              1,059.7         1,108.7
          Deferred income taxes                                               430.5           376.9
          Other assets                                                        535.9           346.0
                                                                      ------------------------------

                    Total                                             $     3,099.3   $     2,994.8
                                                                      ==============================

                       LIABILITIES & STOCKHOLDERS' EQUITY
          Current liabilities:
               Accounts payable                                       $       196.2   $       173.3
               Accrued interest                                                24.7            37.3
               Accrued salaries, wages, and related expenses                   59.4            73.8
               Accrued postretirement medical benefit obligation -             48.2            48.2
                    current portion
               Other accrued liabilities                                      153.0           150.2
               Payable to affiliates                                           82.4            75.3
               Long-term debt - current portion                                  .3              .4
                                                                      ------------------------------
                    Total current liabilities                                 564.2           558.5

          Long-term liabilities                                               733.7           533.0
          Accrued postretirement medical benefit obligation                   684.1           694.3
          Long-term debt                                                      969.9           962.6
          Minority interests                                                   95.1           101.9
          Redeemable preference stock                                          19.4            20.1
          Commitments and contingencies
          Stockholders' equity:
               Preferred stock                                                  1.5             1.5
               Common stock                                                    15.4            15.4
               Additional capital                                           2,142.9         2,052.8
               Accumulated deficit                                           (244.1)         (151.2)
               Less: Note receivable from parent                           (1,882.8)       (1,794.1)
                                                                      ------------------------------
                    Total stockholders' equity                                 32.9           124.4
                                                                      ------------------------------

                         Total                                        $     3,099.3   $     2,994.8
                                                                      ==============================


          </TABLE>

               The accompanying notes to interim consolidated financial
                 statements are an integral part of these statements.






           KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

                       STATEMENTS OF CONSOLIDATED INCOME (LOSS)
                                     (Unaudited)
                               (In millions of dollars)

          <TABLE>
          <CAPTION>

                                                                    Quarter Ended                Nine Months Ended
                                                                    September 30,                  September 30,
                                                            -----------------------------  -----------------------------
                                                                      1999           1998            1999           1998
                                                            -----------------------------  -----------------------------
          <S>                                               <C>            <C>             <C>            <C>
          Net sales                                         $       520.3  $       541.6   $     1,524.7  $     1,753.4
                                                            -----------------------------  -----------------------------

          Costs and expenses:
               Cost of products sold                                463.9          458.2         1,397.7        1,458.8
               Depreciation and amortization                         20.9           24.5            69.4           74.8
               Selling, administrative, research and
                    development, and general                         28.4           28.0            82.6           88.5
               Non-cash impairment of Micromill assets               19.1           -               19.1           -
                                                            -----------------------------  -----------------------------
                         Total costs and expenses                   532.3          510.7         1,568.8        1,622.1
                                                            -----------------------------  -----------------------------

          Operating income (loss)                                   (12.0)          30.9           (44.1)         131.3

          Other income (expense):
               Interest expense                                     (27.3)         (27.7)          (82.4)         (82.6)
               Other - net                                          (21.9)           1.3           (19.3)           (.5)
                                                            -----------------------------  -----------------------------

          Income (loss) before income taxes and minority
               interests                                            (61.2)           4.5          (145.8)          48.2

          Benefit (provision) for income taxes                       21.1            6.7            49.9           (8.5)

          Minority interests                                          1.3           -                4.1            1.3
                                                            -----------------------------  -----------------------------

          Net income (loss)                                 $       (38.8) $        11.2   $       (91.8) $        41.0
                                                            =============================  =============================


          </TABLE>




               The accompanying notes to interim consolidated financial
                 statements are an integral part of these statements.






           KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

                        STATEMENTS OF CONSOLIDATED CASH FLOWS
                                     (Unaudited)
                               (In millions of dollars)

          <TABLE>
          <CAPTION>
                                                                                        Nine Months Ended
                                                                                          September 30,
                                                                                --------------------------------
                                                                                          1999              1998
                                                                                --------------------------------
          <S>                                                                   <C>               <C>
          Cash flows from operating activities:
               Net income (loss)                                                $       (91.8)    $        41.0
               Adjustments to reconcile net income (loss) to net cash (used)
                    provided by operating activities:
                    Depreciation and amortization (including deferred financing
                         costs of $3.2 and $3.0)                                         72.6              77.8
                    Gain on sale of interest in AKW joint venture                       (50.5)             -
                    Non-cash impairment of Micromill assets                              19.1              -
                    Non-cash benefit for income taxes                                    -                 (8.3)
                    Equity in (income) loss of unconsolidated affiliates, net
                         of distributions                                                (2.0)               .9
                    Minority interests                                                   (4.1)             (1.3)
                    (Increase) decrease in receivables                                   (5.0)             43.0
                    (Increase) decrease in inventories                                  (10.7)             48.6
                    (Increase) decrease in prepaid expenses and other current
                         assets                                                         (35.2)             26.1
                    Increase (decrease) in accounts payable and accrued interest         10.3             (17.2)
                    Decrease in payable to affiliates and other accrued
                         liabilities                                                     (1.1)            (47.4)
                    (Decrease) increase in accrued and deferred income taxes            (56.4)              3.1
                    Increase (decrease) in net long-term assets and liabilities          28.2             (26.8)
                    Other                                                                 (.9)              7.6
                                                                                --------------------------------
                         Net cash (used) provided by operating activities              (127.5)            147.1
                                                                                --------------------------------
          Cash flows from investing activities:
               Proceeds from sale of interest in AKW joint venture                       70.4              -
               Capital expenditures                                                     (40.3)            (52.3)
               Other                                                                       .1                .2
                                                                                --------------------------------
                         Net cash provided (used) by investing activities                30.2             (52.1)
                                                                                --------------------------------
          Cash flows from financing activities:
               Borrowings under revolving credit facility, net                            7.7              -
               Repayments of long-term debt                                               (.4)             (7.1)
               Capital stock issued                                                       1.4                .1
               Incurrance of financing costs                                             -                  (.6)
               Decrease in restricted cash, net                                            .7                3.3
               Dividends paid                                                             (.4)              (.5)
               Redemption of minority interests' preference stock                        (1.4)             (8.6)
                                                                                --------------------------------
                         Net cash provided (used) by financing activities                            7.6             (13.4)
                                                                                --------------------------------

          Net (decrease) increase in cash and cash equivalents during                   (89.7)             81.6
               the period
          Cash and cash equivalents at beginning of period                               98.3              15.8
                                                                                --------------------------------
          Cash and cash equivalents at end of period                            $         8.6     $        97.4
                                                                                ================================

          Supplemental disclosure of cash flow information:
               Interest paid, net of capitalized interest                       $        91.8     $        92.6
               Income taxes paid                                                         11.2               9.8
               Tax allocation payments to Kaiser Aluminum Corporation                    -                  2.7

          </TABLE>

               The accompanying notes to interim consolidated financial
                 statements are an integral part of these statements.





                  NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
            (In millions of dollars, except prices and per share amounts)

          1.   GENERAL

               Kaiser Aluminum & Chemical Corporation (the "Company") is
          the principal operating subsidiary of Kaiser Aluminum
          Corporation ("Kaiser").  Kaiser is a subsidiary of MAXXAM Inc.
          ("MAXXAM").  MAXXAM and one of its wholly owned subsidiaries
          together own approximately 63% of the Company's Common Stock
          with the remaining approximately 37% publicly held.

               The foregoing unaudited interim consolidated financial
          statements have been prepared in accordance with generally
          accepted accounting principles for interim financial
          information and with the instructions to Form 10-Q and Article
          10 of Regulation S-X as promulgated by the Securities and
          Exchange Commission.  Accordingly, these financial statements
          do not include all of the disclosures required by generally
          accepted accounting principles for complete financial
          statements.  These unaudited interim consolidated financial
          statements should be read in conjunction with the audited
          consolidated financial statements for the year ended December
          31, 1998.  In the opinion of management, the unaudited interim
          consolidated financial statements furnished herein include all
          adjustments, all of which are of a normal recurring nature,
          necessary for a fair statement of the results for the interim
          periods presented.

               The preparation of financial statements in accordance with
          generally accepted accounting principles requires the use of
          estimates and assumptions that affect the reported amounts of
          assets and liabilities, disclosure of contingent assets and
          liabilities known to exist as of the date the financial
          statements are published, and the reported amounts of revenues
          and expenses during the reporting period. Uncertainties with
          respect to such estimates and assumptions are inherent in the
          preparation of the Company's consolidated financial statements;
          accordingly, it is possible that the actual results could
          differ from these estimates and assumptions, which could have
          a material effect on the reported amounts of the Company's
          consolidated financial position and results of operations.

               Operating results for the quarter and nine-month periods
          ended September 30, 1999, are not necessarily indicative of
          the results that may be expected for the year ending December
          31, 1999.

               Certain reclassifications of prior-year information were
          made to conform to the current presentation.

          INCIDENT AT GRAMERCY FACILITY
               On July 5, 1999, the Company's Gramercy, Louisiana alumina
          refinery was extensively damaged by an explosion in the
          digestion area of the plant.  Twenty-four employees were
          injured in the incident, several of them severely.  As a
          result of the incident, alumina production at the facility was
          completely curtailed.  Production at the plant is currently
          expected to remain curtailed until at least mid-2000 when the
          Company expects to begin partial production.  Based on
          preliminary estimates, full production is currently expected to
          be achieved by the end of 2000 or shortly thereafter. However,
          any delay in obtaining the necessary permits or approvals to
          begin construction or operations would likely delay these
          expected production dates.  Shortly after the incident, the
          Company declared force majeure with respect to certain of its
          third party alumina and hydrate sales contracts and third
          party vendor purchase contracts. However, the Company
          subsequently agreed to supply certain third party alumina
          customers.  See Business Interruption below.

               The cause of the incident is under investigation by the
          Company and governmental agencies.  Depending on the outcome
          of the ongoing investigations by the various government
          agencies, the Company could be subject to civil and/or
          criminal fines and penalties.  However, as more fully
          explained below, based on what is known to date, the Company
          currently believes that the financial impact of this incident
          (in excess of insurance deductibles and self-retention
          provisions) will be largely offset by insurance coverage.

               The Company has significant amounts of insurance coverage
          related to the Gramercy incident.  Deductibles and self-retention
          provisions under the insurance coverage for the
          incident total $5.0, which amounts have been charged to Cost
          of products sold during the quarter ended September 30, 1999.
          The Company's insurance coverage has four separate components:
          property damage, business interruption, liability and workers'
          compensation.  These components are discussed in the following
          paragraphs.

               Property Damage.  The Company's insurance policies provide
          that, if the Company rebuilds the facility (which is the
          Company's current intention), the Company will be reimbursed
          for the costs of repairing or rebuilding the damaged portion
          of the facility using new materials of like kind and quality
          with no deduction for depreciation.  The Company and its
          engineers are in the process of developing construction
          alternatives and cost projections to rebuild the facility.
          Once this process is complete, the Company will have detailed
          discussions with the insurance carriers and their
          representatives regarding the amount of reimbursement.  The
          Company currently expects that it will be able to reach an
          agreement with its insurance carriers as to a minimum amount
          of property damage reimbursement during the fourth quarter of
          1999.  However, there can be no assurance that the discussions
          with the insurance carriers and their representatives will be
          completed by the end of the fourth quarter or that the minimum
          amount of insurance proceeds will be known by that time.  It
          is unclear when the Company will reach a final agreement as to
          the ultimate amount of recoveries the Company will receive.
          At September 30, 1999, the Company had accrued approximately
          $3.0 for estimated property damage insurance recoveries.

               As the estimated amount of reimbursement becomes known to
          the Company, it will be required under generally accepted
          accounting principles to recognize gains to the extent that
          the estimated insurance proceeds exceed the carrying value of
          the damaged property, which is approximately $15.0.  Such
          gains may be reflected beginning in the fourth quarter of 1999
          and from time to time thereafter as additional property
          reimbursements are agreed to by the insurance carriers.  The
          amount of such gains is expected to be significant.  The
          overall impact of recognizing the gains will be a significant
          increase in stockholders' equity and an increase in
          depreciation expense in future years once production is
          restored.

               Business Interruption.  The Company's insurance policies
          provide for the reimbursement of specified continuing expenses
          incurred during the interruption period plus lost profits (or
          less expected losses) plus other expenses incurred as a result
          of the incident.  Operations at the Gramercy facility and a
          49%-owned facility in Jamaica, which supplies bauxite to
          Gramercy, will continue to incur operating expenses until
          production at the Gramercy facility is restored. The Gramercy
          facility will also incur incremental costs for clean up and
          other activities during the remainder of 1999 and 2000.
          Additionally, the Company will incur increased costs as a
          result of recent agreements to supply certain of Gramercy's
          major customers with alumina, despite the fact that the
          Company had declared force majeure with respect to the
          contracts shortly after the incident.  The Company is
          purchasing alumina from third parties, in excess of the
          amounts of alumina available from other Company-owned
          facilities, to supply these customers' needs as well as to
          meet intersegment requirements.  In consideration of all of
          the foregoing items, the Company has recorded expected business
          interruption insurance recoveries totaling $22.0 as a reduction
          of Cost of products sold, which amount substantially offsets
          actual expenses incurred during the quarter ended September 30,
          1999.  However, the amount recorded represents an estimate of
          the Company's business interruption coverage, based on
          preliminary discussions with the insurance carriers and their
          representatives, and is, therefore, subject to change.  The
          Company currently believes that additional amounts may be
          recoverable.  Any adjustments to the recorded amounts of
          expected recovery will be reflected from time to time as
          agreements with the insurance carriers are reached.  The
          amounts of such adjustments could be material.

               Since production has been completely curtailed at the
          Gramercy facility, the Company has, for the time being,
          suspended depreciation of the facility.  Depreciation expense
          for the first six months of 1999 was approximately $6.0.
          However, the Company believes that the depreciation expense
          that would have been incurred may, at least in part, be
          recoverable under its business interruption insurance coverage.

               Liability.  The incident has also resulted in more than
          thirty lawsuits being filed against the Company alleging, among
          other things, property damage and personal injury.  In
          addition, a claim for alleged business interruption losses has
          been made by a neighboring business.  The aggregate amount of
          damages sought in the lawsuits and other claims cannot be
          determined at this time; however, the Company does not
          currently believe the damages will exceed the amount of
          coverage under its liability policies.

               Workers' Compensation.  Claims relating to all of the
          injured employees are expected to be covered under the
          Company's workers' compensation or liability policies.
          However, the aggregate amount of workers' compensation claims
          cannot be determined at this time and it is possible that such
          claims could exceed the Company's coverage limitations.  While
          it is presently impossible to determine the aggregate amount
          of claims that may be incurred, or whether they will exceed
          the Company's coverage limitations, the Company currently
          believes that any amount in excess of the coverage limitations
          will not have a material effect on the Company's consolidated
          financial position or liquidity.  However, it is possible that
          as additional facts become available, additional charges may be
          required and such charges could be material to the period in
          which they are recorded.

               Timing of Insurance Recoveries.  As of September 30,
          1999, the Company has accrued receivables totaling
          approximately $25.0 for estimated recoveries under its property
          damage and business interruption insurance coverage. The
          Company is currently working with the insurance carriers to
          minimize, to the extent possible, the amount and period of
          time between when the Company incurs costs and when it is
          reimbursed.  Delays in receiving insurance proceeds could have
          a temporary adverse impact on the Company's short-term
          liquidity and delay the rebuilding of the Gramercy facility.

          LABOR RELATED COSTS
               The Company is currently operating five of its U.S.
          facilities with salaried employees and other workers as a
          result of the September 30, 1998, strike by the United
          Steelworkers of America ("USWA") and the subsequent "lock-out"
          by the Company in January 1999.  However, the Company has
          continued to accrue certain benefits for the USWA members
          during the period of the strike and subsequent lock-out.  For
          purposes of computing the benefit-related costs and liabilities
          to be reflected in the accompanying interim consolidated
          financial statements, the Company has based its accruals on
          the terms of the previously existing (expired) USWA contract.
          Any differences between any amounts accrued and any amounts
          ultimately agreed to during the collective bargaining process
          will be reflected in future results upon settlement or during
          the term of any new contract.

          Impairment of Micromill Assets
               As previously announced, in early 1999, the Company began
          a search for a strategic partner for the further
          development and deployment of its Micromill(TM) technology.
          This change in strategic course was based on
          management's conclusion that additional time and investment
          would be required to achieve a commercial success. Given
          the Company's other strategic priorities, the Company believed
          that introducing added commercial and financial
          resources was the appropriate course of action for capturing
          the maximum long-term value.  A number of third
          parties were contacted regarding joint ventures or other
          arrangements.  Based on negotiations with these third
          parties, the Company now believes that a sale of the Micromill
          assets and technology is more likely than a
          partnership and that any such sales transaction would likely
          result in the Company receiving a combination of a
          small up-front payment and future payments based on the
          subsequent performance and profitability of the Micromill
          technology.  As a result of these negotiations, the Company
          concluded that the carrying value of the Micromill
          assets should be reduced by $19.1. Accordingly, the Company
          recorded a non-cash impairment charge to reflect this
          write-down in the third quarter of 1999.

          RECENT ACCOUNTING PRONOUNCEMENTS
               In June 1998, the Financial Accounting Standard Board
          ("FASB") issued Statement of Financial Accounting
          Standards ("SFAS") No. 133, Accounting for Derivative
          Instruments and Hedging Activities.  SFAS No. 133 requires
          companies to recognize all derivative instruments as assets or
          liabilities in the balance sheet and to measure
          those instruments at fair value.  Under SFAS No. 133, the
          Company will be required to "mark-to-market" its hedging
          positions at each period-end in advance of recording the
          physical transactions to which the hedges relate.  Changes
          in the fair value of the Company's open hedging positions will
          be reflected as an increase or reduction in
          stockholders' equity through comprehensive income.  The impact
          of the changes in fair value of the Company's
          hedging positions will reverse out of comprehensive income (net
          of any fluctuations in other "open" positions) and
          will be reflected in traditional net income when the
          subsequent physical transactions occur.  Currently, the dollar
          amount of the Company's comprehensive income adjustments is not
          significant so there is not a significant difference
          between "traditional" net income and comprehensive income.
          However, differences between comprehensive income and
          traditional net income may become significant in future periods
          as SFAS No. 133 will result in fluctuations in
          comprehensive income and stockholders' equity in periods of
          price volatility, despite the fact that the Company's
          cash flow and earnings will be "fixed" to the extent hedged.
          This result is contrary to the intent of the
          Company's hedging program, which is to "lock-in" a price (or
          range of prices) for products sold/used so that
          earnings and cash flows are subject to reduced risk of
          volatility.

               Adoption of SFAS No. 133 was initially required on or
          before January 1, 2000.  However, in June 1999, the FASB
          issued SFAS No. 137 which delayed the required implementation
          date of SFAS No. 133 to no later than January 1,
          2001.  The Company is currently evaluating how and when to
          implement SFAS No. 133.

          2.   INVENTORIES

               The classification of inventories is as follows:

          <TABLE>
          <CAPTION>

                                                                          September 30, December 31,
                                                                                   1999           1998
                                                                         -----------------------------
             <S>                                                         <C>            <C>
             Finished fabricated aluminum products                       $        138.3 $        112.4
             Primary aluminum and work in process                                 181.0          205.6
             Bauxite and alumina                                                  112.8          109.5
             Operating supplies and repair and maintenance parts                  122.1          116.0
                                                                         -----------------------------
                  Total                                                  $        554.2 $        543.5
                                                                         =============================

          </TABLE>

               Substantially all product inventories are stated at last-in,
          first-out (LIFO) cost, not in excess of market.  Replacement cost
          is not in excess of LIFO cost.

          3.   CONTINGENCIES

          Environmental Contingencies
               The Company is subject to a number of environmental laws,
          to fines or penalties assessed for alleged breaches
          of such environmental laws, and to claims and litigation based
          upon such laws.  The Company currently is subject to
          a number of claims under the Comprehensive Environmental
          Response, Compensation and Liability Act of 1980, as
          amended by the Superfund Amendments Reauthorization Act of 1986
          ("CERCLA"), and, along with certain other entities,
          has been named as a potentially responsible party for remedial
          costs at certain third-party sites listed on the
          National Priorities List under CERCLA.

               Based on the Company's evaluation of these and other
          environmental matters, the Company has established
          environmental accruals primarily related to potential solid
          waste disposal and soil and groundwater remediation
          matters.  At September 30, 1999, the balance of such accruals,
          which are primarily included in Long-term
          liabilities, was $49.7.  These environmental accruals represent
          the Company's estimate of costs reasonably expected
          to be incurred based on presently enacted laws and
          regulations, currently available facts, existing technology,
          and the Company's assessment of the likely remediation actions to
          be taken.  The Company expects that these remediation
          actions will be taken over the next several years and
          estimates that annual expenditures to be charged to these
          environmental accruals will be approximately $3.0 to $7.0 for
          the years 1999 through 2004 and an aggregate of
          approximately $31.0 thereafter.

               As additional facts are developed and definitive
          remediation plans and necessary regulatory approvals for
          implementation of remediation are established or alternative
          technologies are developed, changes in these and other
          factors may result in actual costs exceeding the current
          environmental accruals.  As the resolution of these
          matters is subject to further regulatory review and approval,
          no specific assurance can be given as to when the
          factors upon which a substantial portion of this estimate is
          based can be expected to be resolved.  However, the
          Company is currently working to resolve certain of these
          matters.

               The Company believes that it has insurance coverage
          available to recover certain incurred and future
          environmental costs and is actively pursuing claims in this
          regard.  No assurances can be given that the Company
          will be successful in attempts to recover incurred or future
          costs from insurers or that the amount of recoveries
          received will ultimately be adequate to cover costs incurred.

               While uncertainties are inherent in the final outcome of
          these environmental matters, and it is presently
          impossible to determine the actual costs that ultimately may
          be incurred, management currently believes that the
          resolution of such uncertainties should not have a material
          adverse effect on the Company's consolidated financial
          position, results of operations, or liquidity.

          Asbestos Contingencies
               The Company is a defendant in a number of lawsuits, some
          of which involve claims of multiple persons, in which
          the plaintiffs allege that certain of their injuries were
          caused by, among other things, exposure to asbestos
          during, and as a result of, their employment or association
          with the Company or exposure to products containing
          asbestos produced or sold by the Company.  The lawsuits
          generally relate to products the Company has not sold for
          at least 20 years. At September 30, 1999, the number of such
          claims pending was approximately 96,600, as compared
          with 86,400 at December 31, 1998.  In 1998, approximately
          22,900 of such claims were received and 13,900 were
          settled or dismissed.  During the quarter and nine-month
          periods ended September 30, 1999, approximately 6,700 and
          23,000 of such claims were received and 4,800 and 12,800 of
          such claims were settled or dismissed.  However, the
          foregoing claim and settlement figures as of and for the
          quarter and nine-month periods ended September 30, 1999,
          do not reflect the fact that as of September 30, 1999, the
          Company has reached agreements under which it expects to
          settle approximately 28,000 of the pending asbestos-related
          claims over an extended period.

               The Company maintains a liability for estimated asbestos-
          related costs for claims filed to date and
          an estimate of claims to be filed over a 10 year period (i.e.,
          through 2009).  The Company's estimate is based on the
          Company's view, at each balance sheet date, of the current and
          anticipated number of asbestos-related claims, the
          timing and amounts of asbestos-related payments, the status of
          ongoing litigation and settlement initiatives, and
          the advice of Wharton Levin Ehrmantraut Klein & Nash, P.A.,
          with respect to the current state of the law related to
          asbestos claims. However, there are inherent uncertainties
          involved in estimating asbestos-related costs and the
          Company's actual costs could exceed the Company's estimates due
          to changes in facts and circumstances after the
          date of each estimate. Further, while the Company does not
          presently believe there is a reasonable basis for
          estimating asbestos-related costs beyond 2009 and, accordingly,
          no accrual has been recorded for any costs which may
          be incurred beyond 2009, there is a reasonable possibility
          that such costs may continue beyond 2009, and that such
          costs could be substantial.  As of September 30, 1999, an
          estimated asbestos-related cost accrual of $396.0, before
          consideration of insurance recoveries, has been reflected in
          the accompanying financial statements primarily in
          Long-term liabilities.  The Company estimates that annual
          future cash payments for asbestos-related costs will range
          from approximately $50.0 to $75.0 in the years 2000 to 2003
          and an aggregate of approximately $121.0 thereafter.

               The Company believes that it has insurance coverage
          available to recover a substantial portion of its asbestos-
          related costs.  Although the Company has settled
          asbestos-related coverage matters with certain of its insurance
          carriers, other carriers have not yet agreed to settlements.
          The timing and amount of future recoveries from these
          insurance carriers will depend on the pace of claims review
          and processing by such carriers and on the resolution
          of any disputes regarding coverage under such policies.  The
          Company believes that substantial recoveries from the
          insurance carriers related to existing asbestos-related
          liabilities are probable.  The Company reached this
          conclusion after considering its prior insurance-related
          recoveries in respect of asbestos-related claims, existing
          insurance policies and the advice of Heller Ehrman White &
          McAuliffe with respect to applicable insurance coverage
          law relating to the terms and conditions of those policies.
          Accordingly, an estimated aggregate insurance recovery
          of $317.9, determined on the same basis as the asbestos-related
          cost accrual, is recorded primarily in Other
          assets at September 30, 1999.  However, no assurances can be
          given that the Company will be able to project similar
          recovery percentages for future asbestos-related claims or that
          the amounts related to future asbestos-related
          claims will not exceed the Company's aggregate insurance
          coverage.

               Management continues to monitor claims activity, the
          status of lawsuits (including settlement initiatives),
          legislative developments, and costs incurred in order to
          ascertain whether an adjustment to the existing accruals
          should be made to the extent that historical experience may
          differ significantly from the Company's underlying
          assumptions. This process resulted in the Company reflecting
          charges of $15.2 and $53.2 (included in Other
          income(expense)) in the quarter and nine-month periods ended
          September 30, 1999, for asbestos-related claims, net of
          expected insurance recoveries, based on recent cost and other
          trends experienced by the Company and other companies.
          While uncertainties are inherent in the final outcome of these
          asbestos matters and it is presently impossible to
          determine the actual costs that ultimately may be incurred and
          insurance recoveries that will be received,
          management currently believes that, based on the factors
          discussed in the preceding paragraphs, the resolution of
          asbestos-related uncertainties and the incurrence of asbestos-
          related costs net of related insurance
          recoveries should not have a material adverse effect on the
          Company's consolidated financial position or liquidity.  However,
          as the Company's estimates are periodically re-evaluated,
          additional charges may be necessary and such charges could
          be material to the results of the period in which they are
          recorded.

          Labor Matters
               In connection with the USWA strike and subsequent lock-out
          by the Company, certain allegations of unfair labor
          practices ("ULPs") were filed with the National Labor Relations
          Board ("NLRB") by the USWA.  As previously
          disclosed, the Company responded to all such allegations and
          believed that they were without merit.  In July 1999,
          the Oakland, California, regional office of the NLRB dismissed
          all material charges filed against the Company.  In
          September 1999, the union filed an appeal of this ruling with
          the NLRB general counsel's office in Washington, DC.
          If the original decision were to be reversed, the matter would
          be referred to an administrative law judge for a
          hearing whose outcome would be subject to an additional appeal
          either by the USWA or the Company.  This process
          could take months or years.  Although the Company knows of no
          reason why the original decision would be reversed on
          appeal, there can be no certainty that the original NLRB
          decision will be upheld.  If these proceedings eventually
          resulted in a definitive ruling against the Company, it could
          be obligated to provide back pay to USWA members at
          the five plants and such amount could be significant.
          However, while uncertainties are inherent in the final
          outcome of such matters, the Company believes that the
          resolution of the alleged ULPs should not result in a
          material adverse effect on the Company's consolidated financial
          position, results of operations, or liquidity.

          Other Contingencies
               The Company is involved in various other claims, lawsuits,
          and other proceedings relating to a wide variety of
          matters.  While uncertainties are inherent in the final
          outcome of such matters, and it is presently impossible to
          determine the actual costs that ultimately may be incurred,
          management currently believes that the resolution of
          such uncertainties and the incurrence of such costs should not
          have a material adverse effect on the Company's
          consolidated financial position, results of operations, or
          liquidity.

               See Note 10 of Notes to Consolidated Financial Statements
          for the year ended December 31, 1998, for additional
          information on commitments and contingencies.

          4.   DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING
               PROGRAMS

               At September 30, 1999, the net unrealized loss on the
          Company's position in aluminum forward sales and option
          contracts (excluding the impact of those contracts discussed
          below which have been marked to market), energy forward
          purchase and option contracts, and forward foreign exchange
          contracts was approximately $36.6 (based on comparisons
          to applicable quarter-end published market prices).  As the
          Company's hedging activities are generally designed to
          lock-in a specified price or range of prices, gains or losses
          on the derivative contracts utilized in these hedging
          activities will generally be offset by losses or gains,
          respectively, on the transactions being hedged.

          Alumina and Aluminum
               The Company's earnings are sensitive to changes in the
          prices of alumina, primary aluminum and fabricated
          aluminum products, and also depend to a significant degree
          upon the volume and mix of all products sold.  Primary
          aluminum prices have historically been subject to significant
          cyclical price fluctuations.  Alumina prices as well
          as fabricated aluminum product prices (which vary considerably
          among products) are significantly influenced by
          changes in the price of primary aluminum but generally lag
          behind primary aluminum price changes by up to three
          months. Since 1993, the Average Midwest United States
          transaction price for primary aluminum has ranged from
          approximately $.50 to $1.00 per pound.

               From time to time in the ordinary course of business, the
          Company enters into hedging transactions to provide
          price risk management in respect of the net exposure of
          earnings and cash flows resulting from (i) anticipated
          sales of alumina, primary aluminum and fabricated aluminum
          products, less (ii) expected purchases of certain items,
          such as aluminum scrap, rolling ingot, and bauxite, whose
          prices fluctuate with the price of primary aluminum.
          Forward sales contracts are used by the Company to effectively
          fix the price that the Company will receive for its
          shipments. The Company also uses option contracts (i) to
          establish a minimum price for its product shipments, (ii)
          to establish a "collar" or range of prices for the Company's
          anticipated sales, and/or (iii) to permit the Company
          to realize possible upside price movements.  As of September
          30, 1999, the Company had sold forward, at fixed
          prices, approximately 6,000* tons of primary aluminum with
          respect to the remainder of 1999. As of September 30,
          1999, the Company had also entered into option contracts that
          established a price range for an additional 65,000,
          341,000 and 180,000 tons of primary aluminum for the remainder
          of 1999, 2000 and 2001, respectively.


          ----------------------
          * All references to tons in this report refer to metric tons of
          2,204.6 pounds.

               Additionally, through September 30, 1999, the Company had
          entered into a series of transactions with a
          counterparty that will provide the Company with a premium over
          the forward market prices at the date of the
          transaction for 4,000 tons of primary aluminum per month
          during the period October 1999 through June 2001.  The
          Company also contracted with the counterparty to receive
          certain fixed prices (also above the forward market prices
          at the date of the transaction) on 8,000 tons of primary
          aluminum per month over a three year period commencing
          October 2001, unless market prices during certain periods
          decline below a stipulated "floor" price, in which case,
          the fixed price sales portion of the transactions terminate.
          The price at which the October 2001 and later
          transactions terminate is well below current market prices.
          While the Company believes that the October 2001 and
          later transactions are consistent with its stated hedging
          objectives, these positions do not qualify for treatment
          as a "hedge" under current accounting guidelines. Accordingly,
          these positions are "mark-to-market" each period.
          For the quarter and nine-month periods ended September 30,
          1999, the Company recorded mark-to-market charges of $5.9
          and $20.0 in Other income (expense) associated with the
          transactions described in this paragraph.

               As of September 30, 1999, virtually all the Company's
          sales of alumina to third parties for 1999, 2000 and
          2001 are indexed to future prices of primary aluminum.

          Energy
               The Company is exposed to energy price risk from
          fluctuating prices for fuel oil and diesel fuel consumed in
          the production process.  The Company from time to time in the
          ordinary course of business enters into hedging
          transactions with major suppliers of energy and energy related
          financial instruments.  As of September 30, 1999,
          the Company held a combination of fixed price purchase and
          option contracts for an average of 249,000 and 232,000
          barrels per month of fuel oil and diesel fuel for 1999 and
          2000, respectively.

          Foreign Currency
               The Company enters into forward exchange contracts to
          hedge material cash commitments in respect of foreign
          subsidiaries or affiliates.  At September 30, 1999, the
          Company had net forward foreign exchange contracts totaling
          approximately $113.1 for the purchase of 170.0 Australian
          dollars from October 1999 through May 2001, in respect of
          its Australian dollar-denominated commitments for the remainder
          of 1999 through May 2001.  In addition, the Company
          has entered into an option contract to purchase 42.0
          Australian dollars for the period from January 2000 through
          June 2001.

               See Note 1 of the Notes to Consolidated Financial
          Statements for the year ended December 31, 1998, for
          additional information concerning the use of derivative
          financial instruments.

          5.   SIGNIFICANT ACQUISITIONS AND DISPOSITIONS

               In February 1999, the Company, through a subsidiary,
          completed the acquisition of its joint venture partner's
          45% interest in Kaiser LaRoche Hydrate Partners ("KLHP") for a
          cash purchase price of approximately $10.0.  As the
          Company already owned 55% of KLHP, the results of KLHP were
          already included in the Company's consolidated
          financial statements.

               On April 1, 1999, the Company completed the previously
          announced sale of its 50% interest in AKW L.P. ("AKW"),
          an aluminum wheels joint venture, to its partner, Accuride
          Corporation for $70.4.  The sale resulted in the Company
          recognizing a net pre-tax gain of $50.5 in the second quarter
          of 1999.  The Company's equity in income of AKW for
          the nine-month period ended September 30, 1999, was $2.5.  The
          Company's equity in income of AKW for the quarter
          and nine-month periods ended September 30, 1998, was $2.2 and
          $5.6, respectively.

          6.   INTERIM OPERATING SEGMENT INFORMATION

               The Company uses a portion of its bauxite, alumina and
          primary aluminum production for additional processing at
          its downstream facilities.  Transfers between business units
          are made at estimated market prices.  The accounting
          policies of the segments are the same as those described in
          Note 1 of Notes to Consolidated Financial Statements
          for the year ended December 31, 1998.  Business unit results
          are evaluated internally by management before any
          allocation of corporate overhead and without any charge for
          income taxes or interest expense.  See Note 12 of Notes
          to Consolidated Financial Statements for the year ended
          December 31, 1998, for additional information regarding the
          Company's segments.

          Financial information by operating segment for the quarters and
          nine months ended September 30, 1999 and 1998 is as
          follows:

          <TABLE>
          <CAPTION>

                                                                     Quarter Ended                  Nine Months Ended
                                                                     September 30,                    September 30,
                                                            ------------------------------   ------------------------------
                                                                      1999            1998             1999            1998
          --------------------------------------------------------------------------------   ------------------------------
          <S>                                               <C>             <C>              <C>             <C>
          Net Sales:
               Bauxite and Alumina: (1)
                    Net sales to unaffiliated customers     $       108.3   $       129.3    $       308.8   $       359.5
                    Intersegment sales                               33.7            21.2             86.3            99.5
                                                            --------------  --------------   --------------  --------------
                                                                    142.0           150.5            395.1           459.0
                                                            --------------  --------------   --------------  --------------
               Primary Aluminum:
                    Net sales to unaffiliated customers             113.5            94.6            303.1           326.6
                    Intersegment sales                               65.7            66.9            177.9           194.7
                                                            --------------  --------------   --------------  --------------
                                                                    179.2           161.5            481.0           521.3
                                                            --------------  --------------   --------------  --------------
               Flat-Rolled Products                                 140.8           166.2            444.4           557.5
               Engineered Products                                  134.5           132.6            405.8           451.2
               Minority interests                                    23.2            18.8             62.6            58.6
               Eliminations                                         (99.4)          (88.0)          (264.2)         (294.2)
                                                            --------------  --------------   --------------  --------------
                                                            $       520.3   $       541.6    $     1,524.7   $     1,753.4
                                                            ==============  ==============   ==============  ==============
          Operating income (loss):
               Bauxite and Alumina (2)                      $          .9   $         9.3    $       (10.4)  $        38.7
               Primary Aluminum (3)                                  10.0            13.6            (10.5)           55.8
               Flat-Rolled Products                                   5.8            16.7             20.7            56.2
               Engineered Products                                   12.2            11.8             29.8            43.3
               Micromill                                            (22.3)           (4.5)           (28.6)          (14.4)
               Eliminations                                           1.1             1.1              6.6             3.5
               Corporate and Other                                  (19.7)          (17.1)           (51.7)          (51.8)
                                                            --------------  --------------   --------------  --------------
                                                            $       (12.0)  $        30.9    $       (44.1)  $       131.3
                                                            ==============  ==============   ==============  ==============
          Depreciation and amortization:
               Bauxite and Alumina (4)                      $         6.0   $         8.8    $        23.8   $        27.4
               Primary Aluminum                                       6.9             7.5             21.2            22.5
               Flat-Rolled Products                                   4.0             4.1             12.2            12.2
               Engineered Products                                    2.6             2.6              7.9             8.0
               Micromill                                               .7              .7              2.1             2.2
               Corporate and Other                                     .7              .8              2.2             2.5
                                                            --------------  --------------   --------------  --------------
                                                            $        20.9   $        24.5    $        69.4   $        74.8
                                                            ==============  ==============   ==============  ==============


          </TABLE>

          (1)  Net sales for the quarter ended September 30, 1999,
               include approximately 190 tons of alumina purchased from
               third parties and resold to certain unaffiliated customers
               of the Gramercy facility and 60 tons of alumina
               purchased from third parties and resold to the Company's
               primary aluminum business unit.
          (2)  Operating income (loss) for the quarter and nine-month
               period ended September 30, 1999, includes estimated
               business interruption insurance recoveries totaling $22.0.
          (3)  Operating income (loss) for the quarter and nine-month
               period ended September 30, 1999, includes potline
               preparation and restart costs of $1.9 and $11.5,
               respectively.
          (4)  Depreciation was suspended for the Gramercy facility for
               the quarter ended September 30, 1999, as a result of
               the July 5, 1999, incident.  Depreciation expense for the
               Gramercy facility for the six months ended June 30,
               1999, was approximately $6.0.

               Excluding the February 1999 purchase of the remaining
          interest in KLHP, which affected the Bauxite and Alumina
          segment, and the April 1999 sale of the Company's interest in
          AKW, which affected the Engineered Products segment,
          there were no material changes in segment assets since
          December 31, 1998.  Capital expenditures made during the
          first nine months of 1999 (other than the acquisition of the
          interest in KLHP) were incurred on a relatively
          ratable basis among the Company's four primary operating
          business segments.

          ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    -------------------------------------------------
                    CONDITION AND RESULTS OF OPERATIONS
                    -----------------------------------

               This section should be read in conjunction with the
          response to Item 1, Part I, of this Report.

               This section contains statements which constitute
          "forward-looking statements" within the meaning of the
          Private Securities Litigation Reform Act of 1995.  These
          statements appear in a number of places in this section
          (see, for example, "Recent Events and Developments," "Results
          of Operations," and "Liquidity and Capital
          Resources").  Such statements can be identified by the use of
          forward-looking terminology such as "believes,"
          "expects," "may," "estimates," "will," "should," "plans" or
          "anticipates" or the negative thereof or other
          variations thereon or comparable terminology, or by discussions
          of strategy.  Readers are cautioned that any such
          forward-looking statements are not guarantees of future
          performance and involve significant risks and uncertainties,
          and that actual results may vary materially from those in the
          forward-looking statements as a result of various
          factors.  These factors include the effectiveness of
          management's strategies and decisions, general economic and
          business conditions, developments in technology, year 2000
          technology issues, new or modified statutory or
          regulatory requirements, and changing prices and market
          conditions.  This section and the Company's Annual Report on
          Form 10-K for the year ended December 31, 1998, each identify
          other factors that could cause such differences.  No
          assurance can be given that these are all of the factors that
          could cause actual results to vary materially from
          the forward-looking statements.

          RECENT EVENTS AND DEVELOPMENTS

          INCIDENT AT GRAMERCY FACILITY
               On July 5, 1999, the Company's Gramercy, Louisiana alumina
          refinery was extensively damaged by an explosion in
          the digestion area of the plant.  Twenty-four employees were
          injured in the incident, several of them severely.  As
          a result of the incident, alumina production at the facility
          was completely curtailed.  Production at the plant is
          currently expected to remain curtailed until at least mid-2000
          when the Company expects to begin partial production.
          Based on preliminary estimates, full production is currently
          expected to be achieved by the end of 2000 or shortly
          thereafter. However, any delay in obtaining the necessary
          permits or approvals to begin construction or operations
          would likely delay these expected production dates.  Shortly
          after the incident, the Company declared force majeure
          with respect to certain of its third party alumina and hydrate
          sales contracts and third party vendor purchase
          contracts. However, the Company subsequently agreed to supply
          certain third party alumina customers.  See Business
          Interruption below.

               The cause of the incident is under investigation by the
          Company and governmental agencies.  Depending on the
          outcome of the ongoing investigations by the various
          government agencies, the Company could be subject
          to civil and/or criminal fines and penalties.
          However, as more fully explained below, based on what is
          known to date, the Company currently believes that the
          financial impact of this incident (in excess of insurance
          deductibles and self-retention provisions) will be largely
          offset by insurance coverage.

               The Company has significant amounts of insurance coverage
          related to the Gramercy incident.  Deductibles and
          self-retention provisions under the insurance coverage for the
          incident total $5.0 million, which amounts have been
          charged to Cost of products sold during the quarter ended
          September 30, 1999.  The Company's insurance coverage has
          four separate components: property damage, business
          interruption, liability and workers' compensation.  These
          components are discussed in the following paragraphs.

               Property Damage.  The Company's insurance policies provide
          that, if the Company rebuilds the facility (which is
          the Company's current intention), the Company will be
          reimbursed for the costs of repairing or rebuilding the
          damaged portion of the facility using new materials of like
          kind and quality with no deduction for depreciation.
          The Company and its engineers are in the process of developing
          construction alternatives and cost projections to
          rebuild the facility.  Once this process is complete, the
          Company will have detailed discussions with the insurance
          carriers and their representatives regarding the amount of
          reimbursement.  The Company currently expects that it
          will be able to reach an agreement with its insurance carriers
          as to a minimum amount of property damage
          reimbursement during the fourth quarter of 1999.  However,
          there can be no assurance that the discussions with the
          insurance carriers and their representatives will be completed
          by the end of the fourth quarter or that the minimum
          amount of insurance proceeds will be known by that time.  It
          is unclear when the Company will reach a final
          agreement as to the ultimate amount of recoveries the Company
          will receive.  At September 30, 1999, the Company had
          accrued approximately $3.0 million for estimated property
          damage insurance recoveries.

               As the estimated amount of reimbursement becomes known to
          the Company, it will be required under generally
          accepted accounting principles to recognize gains to the extent
          that the estimated insurance proceeds exceed the
          carrying value of the damaged property, which is approximately
          $15.0 million.  Such gains may be reflected in the
          fourth quarter of 1999 and from time to time thereafter as
          additional property reimbursements are agreed to by the
          insurance carriers.  The amount of such gains is expected to
          be significant.  The overall impact of recognizing the
          gains will be a significant increase in stockholders' equity
          and an increase in depreciation expense in future
          years once production is restored.

               Business Interruption.  The Company's insurance policies
          provide for the reimbursement of specified continuing
          expenses incurred during the interruption period plus lost
          profits (or less expected losses) plus other expenses
          incurred as a result of the incident.  Operations at the
          Gramercy facility and a 49%-owned facility in Jamaica,
          which supplies bauxite to Gramercy, will continue to incur
          operating expenses until production at the Gramercy
          facility is restored. The Gramercy facility will also incur
          incremental costs for clean up and other activities
          during the remainder of 1999 and 2000. Additionally, the
          Company will incur increased costs as a result of recent
          agreements to supply certain of Gramercy's major customers with
          alumina, despite the fact that the Company had
          declared force majeure with respect to the contracts shortly
          after the incident.  The Company is purchasing alumina
          from third parties, in excess of the amounts of alumina
          available from other Company-owned facilities, to supply
          these customers' needs as well as to meet intersegment
          requirements.  In consideration of all of the foregoing
          items, the Company has recorded expected business interruption
          insurance recoveries totaling $22.0 million as a
          reduction of Cost of products sold, which amount substantially
          offsets actual expenses incurred during the quarter
          ended September 30, 1999.  However, the amount recorded
          represents an estimate of the Company's business
          interruption coverage, based on preliminary discussions with
          the insurance carriers and their representatives, and
          is, therefore, subject to change.  The Company currently
          believes that additional amounts may be recoverable.  Any
          adjustments to the recorded amounts of expected recovery will
          be reflected from time to time as agreements with the
          insurance carriers are reached.  The amounts of such
          adjustments could be material.

               Since production has been curtailed at the Gramercy
          facility, the Company has, for the time being, suspended
          depreciation of the facility.  Depreciation expense for the
          first six months of 1999 was approximately $6.0
          million. However, the Company believes that the depreciation
          expense that would have been incurred may, at least in
          part, be recoverable under its business interruption insurance
          coverage.

               Liability.  The incident has also resulted in more than
          thirty lawsuits being filed against the Company
          alleging, among other things, property damage and personal
          injury.  In addition, a claim for alleged business
          interruption losses has been made by a neighboring business.
          The aggregate amount of damages sought in the
          lawsuits and other claims cannot be determined at this time;
          however, the Company does not currently believe the
          damages will exceed the amount of coverage under its liability
          policies.

               Workers' Compensation.  Claims relating to all of the
          injured employees are expected to be covered under the
          Company's workers' compensation or liability policies.
          However, the aggregate amount of workers' compensation
          claims cannot be determined at this time and it is possible
          that such claims could exceed the Company's coverage
          limitations.  While it is presently impossible to determine
          the aggregate amount of claims that may be incurred, or
          whether they will exceed the Company's coverage limitations,
          the Company currently believes that any amount in
          excess of the coverage limitations will not have a material
          effect on the Company's consolidated financial position
          or liquidity.  However, it is possible that as additional
          facts become available, additional charges may be
          required and such charges could be material to the period in
          which they are recorded.

               Timing of Insurance Recoveries.  As of September 30,
          1999, the Company has accrued receivables totaling
          approximately $25.0 million for estimated recoveries under its
          property damage and business interruption insurance
          coverage.  The Company is currently working with the insurance
          carriers to minimize, to the extent possible, the
          amount and period of time between when the Company incurs
          costs and when it is reimbursed.  Delays in receiving
          insurance proceeds could have a temporary adverse impact on
          the Company's short-term liquidity and delay the
          rebuilding of the Gramercy facility.

          LABOR MATTERS
               Substantially all of the Company's hourly workforce at its
          Gramercy, Louisiana, alumina refinery, Mead and
          Tacoma, Washington, aluminum smelters, Trentwood, Washington,
          rolling mill, and Newark, Ohio, extrusion facility
          were covered by a master labor agreement with the United
          Steelworkers of America (the "USWA") which expired on
          September 30, 1998.  The parties did not reach an agreement
          prior to the expiration of the master agreement and the
          USWA chose to strike.  In January 1999, the Company declined
          an offer by the USWA to have the striking workers
          return to work at the five plants without a new agreement.
          The Company imposed a lock-out to support its
          bargaining position and continues to operate the plants with
          salaried employees and other workers as it has since
          the strike began.

               As a result of the USWA strike, the Company temporarily
          curtailed three out of a total of eleven potlines at
          its Mead and Tacoma, Washington, aluminum smelters at September
          30, 1998 (representing approximately 70,000 tons per
          year of production capacity out of a total combined production
          capacity of 273,000 tons per year at the
          facilities). The first of the two Mead potline restarts was
          completed during the second quarter of 1999.  Restart
          activities on the second of the two Mead potlines were
          completed in August 1999.  The timing for any restart of
          the Tacoma potline has yet to be determined and will depend
          upon market conditions and other factors.

               While the Company initially experienced an adverse strike-
          related impact on its profitability, the
          Company currently believes that the Company's operations at the
          affected facilities have been substantially stabilized and
          will be able to run at, or near, full capacity, and that the
          effect of the incremental costs associated with
          operating the affected plants during the dispute was eliminated
          or substantially reduced as of January 1999
          (excluding the impacts of the restart costs discussed above
          and the effect of market factors such as the continued
          market-related curtailment at the Tacoma smelter).  However, no
          assurances can be given that the Company's efforts
          to run the plants on a sustained basis, without a significant
          business interruption or material adverse impact on
          the Company's operating results, will be successful.

               The Company and the USWA continue to communicate.  The
          objective of the Company has been, and continues to be,
          to negotiate a fair labor contract that is consistent with its
          business strategy and the commercial realities of
          the marketplace.

          Strategic Initiatives
               The Company has previously disclosed that it believes it
          had met, and exceeded, its goal of achieving $120.0
          million of pre-tax cost reductions and other profit
          improvements, independent of metal price changes, measured
          against 1996 results prior to the end of the third quarter of
          1998, when the impact of such items as smelter
          operating levels, the USWA strike and changes in foreign
          currency exchange rates are excluded from the analysis.
          The Company remains committed to sustaining the full $120.0
          million improvement and to generating additional profit
          improvements in future years; however, no assurances can be
          given that the Company will be successful in this
          regard.

               In addition to working to improve the performance of the
          Company's existing assets, the Company has devoted
          significant efforts analyzing its existing asset portfolio with
          the intent of focusing its efforts and capital in
          sectors of the industry that are considered most attractive,
          and in which the Company believes it is well
          positioned to capture value.  The initial steps of this
          process resulted in the June 1997 acquisition of the
          Bellwood extrusion facility, the May 1997 formation of AKW
          L.P. ("AKW"), the rationalization of certain of the
          Company's Engineered Products operations, the Company's
          investment to expand its production capacity for heat treat
          flat-rolled products at its Trentwood, Washington, rolling
          mill, and the Company's fourth quarter 1998 decision to
          seek a strategic partner for further development and deployment
          of the Company's Micromill(TM) technology (see,
          however, Impairment of Micromill Assets below).  This process
          has continued in 1999.  In February 1999, the Company
          completed the acquisition of the remaining 45% interest in
          Kaiser LaRoche Hydrate Partners ("KLHP"), an alumina
          marketing venture, from its joint venture partner for a cash
          purchase price of approximately $10.0 million.
          Additionally, in April 1999, the Company completed the sale of
          its interest in AKW, an aluminum wheel joint
          venture, to its partner, Accuride Corporation for $70.4
          million. The cash sale represents a continuation of the
          Company's strategy to focus its resources and efforts in
          industry segments that are considered most attractive and
          in which it believes it is well positioned to capture value.

               Another area of emphasis has been a continuing focus on
          managing the Company's legacy liabilities, including
          the Company's active pursuit of claims in respect of insurance
          coverage for certain incurred and future
          environmental costs, as evidenced by the Company's fourth
          quarter 1998, receipt of recoveries totaling approximately
          $35.0 million related to current and future claims against
          certain of its insurers.  See Note 10 of Notes to
          Consolidated Financial Statements for the year ended December
          31, 1998, for additional information regarding
          insurance recoveries.

               Additional portfolio analysis and initiatives are
          continuing.

          Impairment of Micromill Assets
               As previously announced, in early 1999, the Company began
          a search for a strategic partner for the further
          development and deployment of its Micromill technology.  This
          change in strategic course was based on management's
          conclusion that additional time and investment would be
          required to achieve a commercial success.  Given the
          Company's other strategic priorities, the Company believed that
          introducing added commercial and financial resources
          was the appropriate course of action for capturing the maximum
          long-term value.  A number of third parties were
          contacted regarding joint ventures or other arrangements.
          Based on negotiations with these third parties, the
          Company now believes that a sale of the Micromill assets and
          technology is more likely than a partnership and that
          any such sales transaction would likely result in the Company
          receiving a combination of a small up-front payment
          and future payments based on the subsequent performance and
          profitability of the Micromill technology.  As a result
          of these negotiations, the Company concluded that the carrying
          value of the Micromill assets should be reduced by
          $19.1 million. Accordingly, the Company recorded a non-cash
          impairment charge to reflect this write-down in the
          third quarter of 1999.

          Valco Operating Level
               The Company's 90%-owned Volta Aluminium Company Limited
          ("Valco") smelter in Ghana operated only one of its
          five potlines during most of 1998.  Each of Valco's potlines
          is capable of producing approximately 40,000 tons per
          year of primary aluminum.  Valco earned compensation in 1998
          (in the form of energy credits to be utilized over the
          last half of 1998 and during 1999) from the Volta River
          Authority ("VRA") in lieu of the power necessary to run
          two of the potlines that were curtailed during 1998.  The
          compensation substantially mitigated the financial impact
          in 1998 of the curtailment of such lines.  However, Valco did
          not receive any compensation from the VRA for one
          additional potline which was curtailed in January 1998.

               Valco's power allocation for 1999 was sufficient for the
          smelter to increase its operations from one potline
          to three potlines as of January 1.  However, production was
          well below this level in the first half of the year
          due to the timing of restarts for the two incremental
          potlines.  Consequently, to compensate for low production the
          first half of the year, Valco has operated above an equivalent
          three-potline annual rate during the third quarter
          of 1999 and is expected to continue this production rate
          during the fourth quarter of 1999.  Valco is not expected
          to receive notice of its 2000 power allocation until sometime
          in the fourth quarter of 1999.  However, taking into
          account the strong rains in the region and the current lake
          level, the Company currently expects that Valco may be
          allocated sufficient power to operate at least four potlines
          throughout 2000.  However, there can be no assurances
          that Valco will be allocated sufficient power to run four
          potlines or that the Valco will, in fact, operate at that
          level.

               Valco has notified the VRA that it believes it had the
          contractual rights at the beginning of 1998 and 1999 to
          sufficient energy to run four and one-half potlines for the
          balance of both years.  Valco continues to seek
          compensation from the VRA with respect to the 1998 and 1999
          reductions in its power allocation.  Valco and the VRA
          also are in continuing discussions concerning other matters,
          including steps that might be taken to reduce the
          likelihood of power curtailments in the future.  No assurances
          can be given as to the success of these discussions.

          Electric Power Contract - Anglesey Aluminium Limited
               The Company owns a 49% interest in the Anglesey Aluminium
          Limited ("Anglesey") smelter in Wales.  Electric
          power for the Anglesey smelter is supplied under a contract
          which expires in 2001.  Anglesey expects to enter into
          a new power agreement in the fourth quarter of 1999 under
          which the existing contract would terminate early, in
          April 2000, and the new agreement would replace it for the
          period April 2000 through September 2005.  The Company
          expects that the price of power under the new agreement will
          be greater than the price under the present contract,
          which will reduce the Company's earnings associated with the
          Anglesey smelter.  However, Anglesey has ongoing
          initiatives to offset the impact of increased energy costs
          through cost reduction and revenue enhancement
          initiatives by 2001.  However, no assurance can be given that
          these initiatives will be successful in offsetting
          such increased energy costs.

          RESULTS OF OPERATIONS

               As an integrated aluminum producer, the Company uses a
          portion of its bauxite, alumina, and primary aluminum
          production for additional processing at certain of its
          downstream facilities.  Intersegment transfers are valued at
          estimated market prices.  The following table provides selected
          operational and financial information on a
          consolidated basis with respect to the Company for the quarter
          and nine-month periods ended September 30, 1999 and
          1998.  The following data should be read in conjunction with
          the Company's interim consolidated financial statements
          and the notes thereto, contained elsewhere herein.  See Note
          12 of Notes to Consolidated Financial Statements for
          the year ended December 31, 1998, for further information
          regarding segments.

               Interim results are not necessarily indicative of those
          for a full year.


                    SELECTED OPERATIONAL AND FINANCIAL INFORMATION
                                     (Unaudited)
                (In millions of dollars, except shipments and prices)


          <TABLE>
          <CAPTION>
                                                                     Quarter Ended                 Nine Months Ended
                                                                     September 30,                   September 30,
                                                            ------------------------------  ------------------------------
                                                                      1999            1998            1999            1998
          --------------------------------------------------------------------------------  ------------------------------
          <S>                                               <C>             <C>             <C>             <C>
          Shipments: (000 tons)
               Alumina (1)
                    Third Party                                     572.4           644.6         1,670.8         1,721.7
                    Intersegment                                    191.4           123.8           531.0           536.2
                                                            --------------  --------------  --------------  --------------
                         Total Alumina                              763.8           768.4         2,201.8         2,257.9
                                                            --------------  --------------  --------------  --------------
               Primary Aluminum
                    Third Party                                      75.4            61.5           207.3           210.3
                    Intersegment                                     44.6            48.8           130.4           134.9
                                                            --------------  --------------  --------------  --------------
                         Total Primary Aluminum                     120.0           110.3           337.7           345.2
                                                            --------------  --------------  --------------  --------------
               Flat-Rolled Products                                  54.3            57.0           165.8           180.3
                                                            --------------  --------------  --------------  --------------
               Engineered Products                                   42.9            40.7           127.8           130.7
                                                            --------------  --------------  --------------  --------------
          Average Realized Third Party Sales Price: (4)
               Alumina (per ton)                            $         177   $         190   $         173   $         195
               Primary Aluminum (per pound)                 $         .68   $         .70   $         .66   $         .70
          Net Sales:
               Bauxite and Alumina (1)
                    Third Party (includes net sales of      $       108.3   $       129.3   $       308.8   $       359.5
                         bauxite)
                    Intersegment                                     33.7            21.2            86.3            99.5
                                                            --------------  --------------  --------------  --------------
                         Total Bauxite & Alumina                    142.0           150.5           395.1           459.0
                                                            --------------  --------------  --------------  --------------
               Primary Aluminum
                    Third Party                                     113.5            94.6           303.1           326.6
                    Intersegment                                     65.7            66.9           177.9           194.7
                                                            --------------  --------------  --------------  --------------
                         Total Primary Aluminum                     179.2           161.5           481.0           521.3
                                                            --------------  --------------  --------------  --------------
               Flat-Rolled Products                                 140.8           166.2           444.4           557.5
               Engineered Products                                  134.5           132.6           405.8           451.2
               Minority Interests                                    23.2            18.8            62.6            58.6
               Eliminations                                         (99.4)          (88.0)         (264.2)         (294.2)
                                                            --------------  --------------  --------------  --------------
                         Total Net Sales                    $       520.3   $       541.6   $     1,524.7   $     1,753.4
                                                            ==============  ==============  ==============  ==============
          Operating Income (Loss):
               Bauxite & Alumina (2)                        $          .9   $         9.3   $       (10.4)  $        38.7
               Primary Aluminum (3)                                  10.0            13.6           (10.5)           55.8
               Flat-Rolled Products                                   5.8            16.7            20.7            56.2
               Engineered Products                                   12.2            11.8            29.8            43.3
               Micromill                                            (22.3)           (4.5)          (28.6)          (14.4)
               Eliminations                                           1.1             1.1             6.6             3.5
               Corporate                                            (19.7)          (17.1)          (51.7)          (51.8)
                                                            --------------  --------------  --------------  --------------
                         Total Operating Income (Loss)      $       (12.0)  $        30.9   $       (44.1)  $       131.3
                                                            ==============  ==============  ==============  ==============
          Net Income (Loss)                                 $       (39.2)  $        10.8   $       (93.1)  $        39.5
                                                            ==============  ==============  ==============  ==============
          Capital Expenditures                              $        10.0   $        15.6   $        40.3   $        52.3
                                                            ==============  ==============  ==============  ==============

          </TABLE>

          (1)  Net sales for the quarter ended September 30, 1999,
               include approximately 190 tons of alumina purchased from
               third parties and resold to certain unaffiliated customers
               of the Gramercy facility and 60 tons of alumina
               purchased from third parties and resold to the Company's
               primary aluminum business unit.
          (2)  Operating income (loss) for the quarter and nine-month
               periods ended September 30, 1999, includes estimated
               business insurance recoveries totaling $22.0.  Additionally,
               depreciation was suspended for the Gramercy
               facility for the quarter ended September 30, 1999, as a
               result of the July 5, 1999, incident.  Depreciation
               expense for the Gramercy facility for the six months ended
               June 30, 1999, was approximately $6.0.
          (3)  Operating income (loss) for the quarter and nine-month
               periods ended September 30, 1999, includes potline
               restart costs of $1.9 and $11.5, respectively.
          (4)  Average realized prices for the Company's Flat-rolled
               products and Engineered products segments are not
               presented as such prices are subject to fluctuations due to
               changes in product mix.  Average realized third
               party sales prices for alumina and primary aluminum include
               the impact of hedging activities.

          Overview
               The Company's operating results are sensitive to changes
          in prices of alumina, primary aluminum, and fabricated
          aluminum products, and also depend to a significant degree on
          the volume and mix of all products sold and on the
          Company's hedging strategies.  Primary aluminum prices have
          historically been subject to significant cyclical price
          fluctuations.  See Note 4 of Notes to Interim Consolidated
          Financial Statements for a discussion of the Company's
          hedging activities.

               Changes in global, regional, or country-specific economic
          conditions can have a significant impact on overall
          demand for aluminum-intensive fabricated products in the
          transportation, distribution, and packaging markets.  Such
          changes in demand can directly affect the Company's earnings
          by impacting the overall volume and mix of such
          products sold.  To the extent that these end-use markets
          weaken, demand can also diminish for what the Company
          sometimes refers to as the "upstream" products: alumina and
          primary aluminum.

               During 1998, the Average Midwest United States transaction
          price ("AMT Price") per pound of primary aluminum
          experienced a steady decline during the year, beginning the
          year in the $.70 to $.75 range and ending the year in
          the low $.60 range.  During the first nine months of 1999, the
          AMT Price for primary aluminum increased from a per
          pound range of $.57 to $.67 during the first six months to a
          $.67 to $.72 per pound range during the third
          quarter. The AMT Price for primary aluminum for the week ended
          October 15, 1999, was approximately $.71 per pound.

          QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1999, COMPARED TO
          QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1998

          Summary
               The Company reported a net loss of $39.2 million for the
          third quarter of 1999 compared to a net income of
          $10.8 million for the same period in 1998.  Net sales in the
          third quarter of 1999 totaled $520.3 million compared
          to $541.6 million in the third quarter of 1998.

               For the nine-month period ended September 30, 1999, the
          Company reported a net loss of $93.1 million compared
          to net income of $39.5 million for the nine-month period ended
          September 30, 1998.  Net sales for the nine-month
          period ended September 30, 1999, were $1,524.7 compared to
          $1,753.4 million for the first nine months of 1998.

               Results for the quarter ended September 30, 1999, included
          a non-cash pre-tax charge of $19.1 million to
          reduce the carrying value of the Company's Micromill assets, a
          non-cash pre-tax charge of $15.2 million for
          asbestos-related claims and a pre-tax charge of $5.9 million
          to reflect mark-to-market adjustments on certain
          primary aluminum hedging transactions.  Results for the nine-
          month period ended September 30, 1999, included
          the non-cash pre-tax Micromill charge, pre-tax charges of $20.0
          million to reflect mark-to-market adjustments on certain
          primary aluminum hedging transactions and non-cash pre-tax
          charges of $53.2 million for asbestos-related claims.
          The charges for the nine-month period were offset by a pre-tax
          gain of $50.5 million on the sale of the Company's
          interests in AKW.

               Results for the quarter and nine-month periods ended
          September 30, 1998, included two essentially offsetting
          non-recurring items, a favorable $8.3 million non-cash tax
          provision benefit resulting from the resolution of
          certain matters and the unfavorable gross profit impact of
          preparing for a strike by employees represented by the
          USWA at five locations.  Additionally, results for the nine-month
          period included charges related to additional litigation reserves
          of $3.9 million.

          Bauxite and Alumina
               Third party net sales of alumina declined 16% for the
          quarter ended September 30, 1999, as compared to the
          same period in 1998 as a result of a 7% decline in third
          party average realized price and a 11% decline in third
          party alumina shipments.  While the per ton amount realized
          from third party sales of alumina under the Company's
          primary aluminum linked alumina sales contracts actually rose
          quarter over quarter, the Company's average realized
          third party prices declined due to a decrease in net gains
          from the Company's hedging activities.  While primary
          aluminum prices have increased by approximately 7% in the
          third quarter of 1999 over second quarter 1999 prices,
          this increase in prices will not be reflected in the segment's
          sales or operating results until the following
          quarter as most of the Company's alumina sales contracts are
          linked to metal prices on a lagged basis of up to
          three months.  The decline in third party shipments of alumina
          between the third quarter of 1999 and 1998 resulted
          primarily from differences in the timing of shipments and, to
          a lesser extent, the net effect of the Gramercy
          incident, after considering the 190,000 tons of alumina
          purchased by the Company from third parties to fulfill
          third party sales contracts.

               Intersegment net sales for the third quarter of 1999
          increased by 59% as compared to the same period in 1998.
          The increase in net sales was due to a 55% increase in
          intersegment shipments, primarily resulting from the impact
          of Valco operating three potlines in 1999 as compared to one
          potline in 1998 and a 3% increase in the intersegment
          average realized price due to higher primary aluminum prices
          in 1999 over the same period in 1998.

               For the nine-month period ended September 30, 1999, third
          party net sales of alumina were 14% lower than the
          comparable period in 1998 as the result of a 11% decline in
          third party average realized prices and a 3% decrease
          in third party shipments.  The decline in average realized
          prices during the first nine months of 1999 as compared
          to 1998 was attributable to lower realizations under the
          Company's primary aluminum linked alumina sales contracts
          caused by lower primary aluminum market prices as well as a
          decrease in net gains from the Company's hedging
          activities. The decrease in year-over-year shipments was
          primarily the effect of the Gramercy incident described
          above.

               Intersegment net sales for the nine-month period ended
          September 30, 1999, declined by 13% as compared to the
          same period in 1998.  The decline in net sales was primarily
          due to the 12% decline in intersegment average
          realized price, due to lower primary aluminum prices, as well
          as reduced intersegment shipments, resulting from
          potline curtailments at the Company's Washington smelters.

               Segment operating income for the quarter and nine-month
          periods ended September 30, 1999, was down from the
          comparable periods in 1998 primarily as a result of the price
          and, to a lesser extent, the volume factors discussed
          above.  Segment operating income for the quarter and nine-months
          ended September 30, 1999, also reflects the
          net impact of the Gramercy incident (see "Recent Events and
          Developments" above) after estimated insurance recoveries.
          Segment operating income for the quarter and nine-month periods
          ended September 30, 1998, included the adverse
          impact of approximately $1.0 million of incremental strike-
          related costs.

          PRIMARY ALUMINUM
               Third party net sales of primary aluminum for the third
          quarter of 1999 were up 20% as compared to the same
          period in 1998 as a result of a 23% increase in third party
          shipments offset, in part, by a 3% decrease in the
          average realized third party sales prices.  The increase in
          quarterly shipments was primarily due to the favorable
          impact of Valco operating three potlines in 1999, as compared
          to one potline in 1998, net of the unfavorable impact
          of the curtailments of one potline at the Tacoma smelter and
          one potline at the Mead smelter for a portion of the
          quarter.  While average primary aluminum market prices for the
          quarter ended September 30, 1999, were greater than
          those in the third quarter of 1998, the Company experienced a
          reduction in quarter-over-quarter average realized
          third party prices as a result of a decrease in net gains from
          the Company's hedging activities.  Intersegment net
          sales in the third quarter of 1999 decreased approximately 2%
          from 1998. Intersegment shipments decreased 9% from
          the comparable prior year period while the average realized
          price increased by 8%. The increase in the average
          realized price resulted from higher primary aluminum prices for
          1999 over the same period in 1998. The decrease in
          intersegment shipments between 1999 and 1998 was due to the
          timing of shipments to the Company's fabricated
          business units as well as reduced internal requirements,
          primarily at the Company's flat-rolled business units.

               For the nine-month period ended September 30, 1999, third
          party net sales of primary aluminum declined
          approximately 7% from the comparable period in 1998, primarily
          as a result of a 6% decline in third party average
          realized prices.  Third party shipments were essentially flat.
          The decline in third party average realized prices
          was attributable to both a decrease in primary aluminum market
          prices and a decrease in net gains from the
          Company's hedging activities.  Intersegment net sales for the
          first nine months of 1999 were down 9% as compared to
          the same period in 1998.  Intersegment average realized prices
          were down 5% reflecting lower market prices for
          aluminum.  Intersegment shipments declined 3% and was due to
          the timing of shipments to the Company's fabricated
          business units.

               Segment operating income for the quarter and nine-month
          periods ended September 30, 1999, was down from the
          comparable periods of 1998.  The most significant component of
          this decline was the reduction in average realized
          prices discussed above.  However, also included in 1999
          results were the adverse impact of the Valco and Washington
          smelter potline curtailments (including the fact that there is
          no mitigating compensation being earned in 1999 for
          the Valco potline curtailments) and costs of approximately $1.9
          million and $11.5 million for the quarter and nine-month
          periods ended September 30, 1999, respectively, associated with
          preparing and restarting potlines at Valco and
          the Washington smelters.  Segment operating income for the
          quarter and nine-month periods ended September 30, 1998,
          included the adverse impact of approximately $5.0 million of
          incremental strike-related costs.

          FLAT-ROLLED PRODUCTS
               Net sales of flat-rolled products for the third quarter
          of 1999 declined by 15% compared to the third quarter
          of 1998 as a result of a 11% decline in average realized
          prices and a 5% decline in shipments.  The reduction in
          shipments was primarily due to reduced demand in 1999 for
          aerospace heat treat products offset, in small part, by
          increased shipments of general engineering products.  The
          decline in 1999 average realized prices resulted primarily
          from a shift of product mix (from aerospace products, which
          have a higher price and operating margin, to other
          products) and a reduction in prices resulting from reduced
          demand for heat treat products.

               For the nine-month period ended September 30, 1999, net
          sales of flat rolled products declined by 20% from the
          comparable period in 1998 as a result of a 13% decline in
          average realize price and a 8% decline in product
          shipments.  The declines in year-to-date 1999 prices and
          shipments as compared to 1998 were attributable to the
          same factors described above for the third quarter of 1999 and
          were also responsible for the significant decline in
          segment operating income both for the third quarter and year-to-
          date periods.  Segment operating income for
          the quarter and nine-month periods ended September 30, 1998,
          included the adverse impact of approximately $3.0 million
          of incremental strike-related costs.

          ENGINEERED PRODUCTS
               Third quarter 1999 net sales of engineered products were
          slightly higher than those in the third quarter of
          1998. A 5% increase in product shipments was substantially
          offset by a 4% decline in average realized prices.  The
          increase in quarterly shipments was due to a strong increase
          in the 1999 demand for ground transportation products
          offset, in part, by a reduced demand in 1999 for aerospace
          products.  The reduction in average realized price
          between periods was attributable to a change in product mix
          (higher ground transportation shipments offset by lower
          aerospace shipments).  For the nine-month period ended
          September 30, 1999, net sales of engineered products declined
          by approximately 10% from the comparable period in 1998, as a
          result of a 8% decline in average realized prices and
          a 2% decline in product shipments.  The decline in year-to-date
          average prices was due to the change in product mix as described
          above for the third quarter of 1999.  On a year-to-date basis,
          shipments of engineered products for 1999 declined slightly from
          1998 as reduced aerospace shipments were almost entirely
          offset by increased ground transportation product shipments.

               The reasons for the increase in segment operating income
          for the third quarter 1999 from the comparable period
          in 1998 were the same factors as discussed above.  Segment
          operating income for the 1999 year-to-date period
          declined from the comparable period in 1998 as a result of the
          reduced equity in earnings from AKW (which
          partnership interests were sold in April 1999) as well as the
          product mix shift discussed above.  Segment operating
          income for the quarter and nine-month periods ended September
          30, 1998, included the adverse impact of approximately
          $1.0 million of incremental strike-related costs.

          ELIMINATIONS
               Eliminations of intersegment profit vary from period to
          period depending on fluctuations in market prices as
          well as the amount and timing of the affected segments'
          production and sales.

          Corporate and Other
               Corporate operating expenses included corporate general
          and administrative expenses which were not allocated to
          the Company's business segments.  Corporate operating expenses
          for the quarter ended September 30, 1999, increased
          over the prior year and other recent periods primarily as a
          result of a $3.0 million non-cash re-allocation of
          certain benefit costs between the Corporate and other business
          segments.

          LIQUIDITY AND CAPITAL RESOURCES

          Operating Activities
               At September 30, 1999, the Company had working capital of
          $407.3 million, compared with working capital of
          $471.6 million at December 31, 1998.  The decrease in working
          capital primarily resulted from a decrease in Cash
          and cash equivalents and an increase in Prepaid expenses and
          other current assets which resulted primarily from
          increased workers compensation insurance deposits.

          INVESTING ACTIVITIES
               Capital expenditures during the nine months ended
          September 30, 1999, were $40.3 million. The only significant
          expenditure was the purchase of the remaining 45% interest in
          KLHP for approximately $10.0 million.  The remainder
          of the year-to-date 1999 capital expenditures were primarily
          used to improve production efficiency and reduce
          operating costs.

               Total consolidated capital expenditures (of which
          approximately 8% is expected to be funded by the Company's
          minority partners in certain foreign joint ventures) are
          expected to be between $60 and $133 million per annum in
          each of 1999 through 2001, prior to any consideration of plans
          to rebuild the Gramercy facility.  Management
          continues to evaluate numerous projects all of which would
          require substantial capital, both in the United States
          and overseas. The level of capital expenditures may be
          adjusted from time to time depending on the Company's price
          outlook for primary aluminum and other products, the Company's
          ability to assure future cash flows through hedging
          or other means, the Company's financial position and other
          factors.

          Financing Activities and Liquidity
               At September 30, 1999, the Company had long-term debt of
          $970 million, including $7.7 million outstanding under
          the revolving credit facility of the Credit Agreement, compared
          with $963.0 million at December 31, 1998.

               At September 30, 1999, $244.1 million (of which $54.7
          million could have been used for letters of credit) was
          available to the Company under the Credit Agreement.  Loans
          under the Credit Agreement bear interest at a spread
          (which varies based on the results of a financial test) over
          either a base rate or LIBOR at the Company's option.
          During the quarter ended September 30, 1999, the average per
          annum interest rate on loans outstanding under the
          Credit Agreement was approximately 9.75%.  The Credit Agreement
          does not permit Kaiser, and significantly restricts
          the Company's ability, to pay any dividends on their common
          stock.

               As of September 30, 1999, the Company had accrued
          receivables relating to the Gramercy incident totaling
          approximately $25.0 million for estimated recoveries under its
          property damage and business interruption insurance
          coverage.  The Company is currently working with the insurance
          carriers to minimize, to the extent possible, the
          amount and period of time between when the Company incurs
          costs and when it is reimbursed.  Delays in receiving
          insurance proceeds could have a temporary adverse impact on
          the Company's short-term liquidity and delay the
          rebuilding of the Gramercy facility.  However, management
          believes that the Company's existing cash resources,
          together with cash flows from operations and borrowings under
          the Credit Agreement, will be sufficient to meet its
          working capital and capital expenditure requirements for the
          next year.

               The Company's ability to make payments on and to
          refinance its debt depends on its ability to generate cash in
          the future.  This, to a certain extent, is subject to general
          economic, financial, competitive, legislative,
          regulatory and other factors beyond the Company's control.
          The Company will need to refinance all or a substantial
          portion of its debt on or before its maturity.  No assurance
          can be given that the Company will be able to
          refinance its debt on acceptable terms.  However, with respect
          to long-term liquidity, management believes that
          operating cash flow, together with the ability to obtain both
          short and long-term financing, should provide
          sufficient funds to meet the Company's working capital and
          capital expenditure requirements.

          OTHER MATTERS

          Year 2000 Readiness Disclosure
               The Company utilizes software and related technologies
          throughout its business that will be affected by the
          date change to the year 2000.  There may also be technology
          embedded in certain of the equipment owned or used by
          the Company that is susceptible to the year 2000 date change
          as well.  The Company has a company-wide program which
          coordinates the year 2000 efforts of its individual business
          units and tracks their progress.  The intent of the
          program is to make sure that critical items are identified on
          a sufficiently timely basis to assure that the
          necessary resources can be committed to address any material
          risk areas that could prevent the Company's systems
          and assets from being able to meet the Company's business
          needs and objectives.  Year 2000 progress and readiness
          has also been the subject of the Company's normal, recurring
          internal audit function.

               Each of the Company's business units has developed year
          2000 plans specifically tailored to its individual
          situation.  A wide range of solutions is being implemented,
          including modifying existing systems and, in limited
          cases where it is cost effective, purchasing new systems.
          Total spending related to these projects, which began in
          1997 and is expected to continue through 1999, is currently
          estimated to be in the $10-15 million range. As of
          September 30, 1999, the Company estimates that approximately
          $1.8 million of year 2000 expenditures are yet to be
          incurred.  Such remaining amounts are expected to be incurred
          during the fourth quarter of 1999.  System
          modification costs were expensed as incurred.  Costs associated
          with new systems are being capitalized and will be
          amortized over the life of the system.  In total, the Company
          believes that its remediation and testing efforts are
          over 90% complete at September 30, 1999.  The balance is
          expected to be completed by November 1999.  The Company
          plans to commit the necessary resources for these efforts.

               In addition to addressing the Company's internal systems,
          the company-wide program involved identification of
          key suppliers, customers, and other third-party relationships
          that could be impacted by year 2000 issues.  A
          general survey has been conducted of the Company's supplier
          and customer base.  Direct contact has been made with
          parties which are deemed to be particularly critical including
          financial institutions, power suppliers, and
          customers, with which the Company has a material relationship.

               Each business unit, including the corporate group, has
          developed a contingency plan covering the steps that
          would be taken if a year 2000 problem were to occur despite
          the Company's best efforts to identify and remediate
          all critical at-risk items.  Formal contingency plans have
          been completed for approximately 85% of the Company's
          facilities and their individual systems as of September 30,
          1999.  Contingency plans for the remaining facilities
          and systems are expected to be completed by October 31, 1999.
          When complete, each contingency plan will address,
          among other things, matters such as alternative suppliers for
          critical inputs, incremental standby labor
          requirements at the millennium to address any problems as they
          occur, and backup processing capabilities for
          critical equipment or processes.  The goal of the contingency
          plans will be to minimize any business disruption,
          such as power shortages and failures by major suppliers, and
          the associated financial implications.

               While the Company believes that its program has identified
          the critical issues and associated costs necessary
          to address possible year 2000 problems, there can be no
          assurances that the program or underlying steps implemented
          were successful in resolving all such issues.  If the steps
          taken by the Company (or critical third parties) are
          not successful in identifying and remediating all significant
          year 2000 issues, business disruptions or delays could
          occur and could have a material adverse impact on the
          Company's results and financial condition.  The Company
          believes that the most likely worst case scenario would
          involve shortages or unanticipated outages of energy
          requirements.  Our operations, particularly in the smelting
          facilities, require significant quantities of energy.
          Curtailments or disruptions of energy supplies would result in
          full or partial shutdowns of these operations until
          energy availability could be restored.  In addition, an
          unanticipated loss of energy supply could result in damage
          to production equipment. However, based on the information the
          Company has gathered to date and the Company's
          expectations of its ability to remediate problems encountered,
          the Company currently believes that significant
          business disruptions that would have a material impact on the
          Company's results or financial condition will not be
          encountered.

          ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                    -----------------------------------------------------
                    RISK
                    ----
               See Part I, Item 7A. "QUANTITATIVE AND QUALITATIVE
          DISCLOSURE ABOUT MARKET RISK" in the Company's Form 10-K
          for the year ended December 31, 1998.

               As a result of the Company's hedging activities through
          September 30, 1999, approximately 50%, 70% and 30% of
          the Company's net hedgable volume with respect to the fourth
          quarter of 1999, 2000 and 2001, respectively, is
          subject to minimum and maximum contract prices.  The average
          minimum contract prices with respect to the balance of
          1999, 2000 and 2001 range from moderately below to
          significantly below the average AMT price for the week ended
          October 15, 1999.  The average maximum contract prices with
          respect to the fourth quarter of 1999 and 2000
          approximate the average AMT price for the week ended October
          15, 1999.  The average maximum contract price with
          respect to 2001 is moderately above the average AMT price for
          the week ended October 15, 1999.  While the
          aforementioned hedging contracts lock in a range of prices for
          a portion of the Company's net hedgable volume, the
          Company's average realized prices will typically exceed the
          amounts realized on its hedging contracts due to
          location, product and purity premiums on the physical metal
          sales.

                             PART II - OTHER INFORMATION

          ITEM 1.   LEGAL PROCEEDINGS
                    -----------------
          Asbestos-related Litigation

               The Company is a defendant in a number of lawsuits, some
          of which involve claims of multiple persons, in which
          the plaintiffs allege that certain of their injuries were
          caused by, among other things, exposure to asbestos
          during, and as a result of, their employment or association
          with the Company or exposure to products containing
          asbestos produced or sold by the Company.  The portion of Note
          3 of Notes to Interim Consolidated Financial
          Statements contained in this report under the heading "Asbestos
          Contingencies" is incorporated herein by reference.
          See Part I, Item 3. "LEGAL PROCEEDINGS - Asbestos-related
          Litigation" in the Company's Form 10-K for the year ended
          December 31, 1998.

          ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
                    --------------------------------

               (a)  Exhibits.

               Exhibit No.    Exhibit
               -----------    -------

                 3.1     Restated Certificate of Incorporation of Kaiser
                         Aluminum & Chemical Corporation (the "Company"
                         or "KACC"), dated July 25, 1989 (incorporated by
                         reference to Exhibit 3.1 to the Registration
                         Statement on Form S-1, dated August 25, 1989,
                         filed by KACC, Registration No. 33-30645).

                 3.2     Certificate of Retirement of KACC, dated
                         February 7, 1990 (incorporated by reference to
                         Exhibit 3.2 to the Report on Form 10-K for the
                         period ended December 31,1989, filed by KACC,
                         File No. 1-3605).

                 3.3     Certificate of Retirement of KACC, dated October
                         1, 1997 (incorporated by reference to Exhibit
                         3.3 to the Report on Form 10-Q for the quarterly
                         period ended September 30, 1997, filed by KACC,
                         File No. 1-3605).

                *4.1     Seventeenth Amendment to Credit Agreement, dated
                         as of September 24, 1999, amending the Credit
                         Agreement, dated as February 15, 1994, as amended,
                         among KACC, Kaiser, the financial institutions
                         party thereto and BankAmerica Business Credit, as
                         agent.

               *27  Financial Data Schedule.

               (b)  Reports on Form 8-K.

               A Report on Form 8-K was filed by the Company on July 2,
          1999, announcing the expected impact of certain non-operating
          adjustments on second quarter 1999 results.

               A Report on Form 8-K was filed by the Company on July 9,
          1999, announcing that on July 5, 1999, KACC's
          Gramercy, Louisiana alumina refinery had been extensively
          damaged by an explosion and that production at the
          plant would be curtailed for several months.

               No other Current Report on Form 8-K was filed by the
          Company during the quarter ended September 30, 1999.


          ---------------
          *    Filed herewith


                                      SIGNATURE

               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, who have signed this report on
          behalf of the registrant as the principal financial officer
          and principal accounting officer of the registrant,
          respectively.

                                             KAISER ALUMINUM & CHEMICAL
                                             CORPORATION


                                                  /s/John T. La Duc
                                             By:-------------------------
                                                     John T. La Duc
                                              Executive Vice President and
                                                 Chief Financial Officer
                                              (Principal Financial Officer)


                                                  /s/Daniel D.Maddox
                                             By:-------------------------
                                                    Daniel D. Maddox
                                              Vice President and Controller
                                                       (Principal
                                                   Accounting Officer)



          Dated:    October 26, 1999