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




                     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, 1997

                       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)


                               (510) 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 31, 1997, 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,
                                                                      1997            1996
                                                            ------------------------------
<S>                                                         <C>             <C>
                           ASSETS                             (Unaudited)        
Current assets:
     Cash and cash equivalents                              $        26.3   $        81.3 
     Receivables                                                    310.0           255.6 
     Inventories                                                    553.3           562.2 
     Prepaid expenses and other current assets                      125.1           127.8 
                                                            ------------------------------
          Total current assets                                    1,014.7         1,026.9 
Investments in and advances to unconsolidated affiliates            158.1           168.4 
Property, plant, and equipment - net                              1,162.9         1,168.7 
Deferred income taxes                                               296.3           263.3 
Other assets                                                        335.5           308.6 
                                                            ------------------------------
               Total                                        $     2,967.5   $     2,935.9 
                                                            ==============================
             LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                       $       161.1   $       189.3 
     Accrued interest                                                24.8            35.6 
     Accrued salaries, wages, and related expenses                   76.7            95.4 
     Accrued postretirement medical benefit obligation -
          current portion                                            50.1            50.1 
     Other accrued liabilities                                      121.9           132.8 
     Payable to affiliates                                          102.6            96.9 
     Long-term debt - current portion                                 2.7             8.9 
     Note payable to parent                                                           8.6 
                                                            ------------------------------
          Total current liabilities                                 539.9           617.6 
Long-term liabilities                                               515.9           458.1 
Accrued postretirement medical benefit obligation                   714.6           722.5 
Long-term debt                                                      969.3           953.0 
Minority interests                                                   95.4            92.5 
Redeemable preference stock                                          27.7            27.5 
Commitments and contingencies
Stockholders' equity:
     Preference stock                                                 1.6             1.7 
     Common stock                                                    15.4            15.4 
     Additional capital                                           1,913.3         1,829.8 
     Accumulated deficit                                           (166.7)         (201.3)
     Additional minimum pension liability                            (2.8)           (2.8)
     Less: Note receivable from parent                           (1,656.1)       (1,578.1)
                                                            ------------------------------
          Total stockholders' equity                                104.7            64.7 
                                                            ------------------------------
               Total                                        $     2,967.5   $     2,935.9 
                                                            ==============================

</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,
                                                                 ------------------------------  ------------------------------
                                                                           1997            1996            1997            1996
                                                                 ------------------------------  ------------------------------
<S>                                                              <C>             <C>             <C>             <C>
Net sales                                                        $       634.1   $       553.4   $     1,778.6   $     1,652.1 
                                                                 ------------------------------  ------------------------------
Costs and expenses:
     Cost of products sold                                               523.6           485.0         1,473.6         1,394.8 
     Depreciation                                                         22.9            24.3            68.8            72.5 
     Selling, administrative, research and development, and
          general                                                         33.0            32.7            93.5            96.0 
     Restructuring of operations                                                                          19.7                 
                                                                 ------------------------------  ------------------------------
               Total costs and expenses                                  579.5           542.0         1,655.6         1,563.3 
                                                                 ------------------------------  ------------------------------
Operating income                                                          54.6            11.4           123.0            88.8 
Other income (expense):
     Interest expense                                                    (27.4)          (22.6)          (83.3)          (68.3)
     Other - net                                                           2.0             2.2             1.2             3.1 
                                                                 ------------------------------  ------------------------------
Income (loss) before income taxes and minority interests                  29.2            (9.0)           40.9            23.6 
(Provision) benefit for income taxes                                     (11.0)            3.8            (2.9)           (8.4)
Minority interests                                                          .2              .4             (.7)             .5 
                                                                 ------------------------------  ------------------------------
Net income (loss)                                                $        18.4   $        (4.8)  $        37.3   $        15.7 
                                                                 ==============================  ==============================

</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,
                                                                      ------------------------------
                                                                                1997            1996
                                                                      ------------------------------
<S>                                                                   <C>             <C>
Cash flows from operating activities:
     Net income                                                       $        37.3   $        15.7 
     Adjustments to reconcile net income to net cash provided (used)                 
          by operating activities:
          Depreciation                                                         68.8            72.5 
          Restructuring of operations                                          19.7 
          Non-cash benefit for income taxes                                   (12.5)
          Amortization of excess investment over equity in
               unconsolidated affiliates                                        8.7             8.7 
          Amortization of deferred financing costs and net discount
               on long-term debt                                                4.5             4.1 
          Undistributed equity in (income) loss of unconsolidated
               affiliates, net of distributions                                16.7            (7.5)
          Minority interests                                                     .7             (.4)
          (Increase) decrease in receivables                                  (61.2)           36.6 
          (Increase) decrease in inventories                                    5.7           (19.8)
          (Increase) decrease in prepaid expenses and other assets              1.1           (38.1)
          Decrease in accounts payable                                        (28.2)          (24.1)
          Decrease in accrued interest                                        (10.8)          (18.4)
          Decrease in payable to affiliates and accrued liabilities           (29.8)          (18.8)
          Decrease in accrued and deferred income taxes                        (1.6)          (18.6)
          Other                                                                 3.9             3.7 
                                                                      ------------------------------
               Net cash provided (used) by operating activities                 23.0           (4.4)
                                                                      ------------------------------
Cash flows from investing activities:
     Net proceeds from disposition of property and investments                 22.2             1.6 
     Capital expenditures                                                     (94.7)          (91.1)
     Other                                                                     (2.5)           (1.3)
                                                                      ------------------------------
               Net cash used by investing activities                          (75.0)          (90.8)
                                                                      ------------------------------
Cash flows from financing activities:
     Borrowings under revolving credit facility, net                                          118.1 
     Borrowings of long-term debt                                              19.0 
     Repayments of long-term debt                                              (8.6)           (9.0)
     Payments to parent                                                        (8.6)           (8.6)
     Increase in restricted cash, net                                          (6.5)
     Incurrence of financing costs                                             (0.6)
     Dividends paid                                                             (.4)            (.6)
     Redemption of preference stock                                             2.7            (5.2)
     Capital contribution                                                                        .3 
                                                                      ------------------------------
               Net cash provided (used) by financing activities                (3.0)           95.0 
                                                                      ------------------------------
Net decrease in cash and cash equivalents during the period                   (55.0)            (.2)
Cash and cash equivalents at beginning of period                               81.3            21.7 
                                                                      ------------------------------
Cash and cash equivalents at end of period                            $        26.3   $        21.5 
                                                                      ==============================
Supplemental disclosure of cash flow information:
     Interest paid, net of capitalized interest                       $        89.5   $        82.7 
     Income taxes paid                                                         13.9            22.4 
     Tax allocation payments to Kaiser Aluminum Corporation                      .9             2.7 
     Tax allocation payments to MAXXAM Inc.                                                     1.1 

</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 Kaiser'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,
1996.  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 ended September 30, 1997, are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1997.

2.   INVENTORIES

     The classification of inventories is as follows:
<TABLE>

<CAPTION>
                                                             September 30,    December 31,
                                                                      1997            1996
                                                            ------------------------------
<S>                                                         <C>             <C>
Finished fabricated aluminum products                       $         95.4  $        113.5
Primary aluminum and work in process                                 220.7           200.3
Bauxite and alumina                                                  110.5           110.2
Operating supplies and repair and maintenance parts                  126.7           138.2
                                                            ------------------------------
     Total                                                  $        553.3  $        562.2
                                                            ==============================

</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.   SOLID WASTE DISPOSAL REVENUE BONDS

     In March 1997, the Company entered into an agreement (the "Loan
Agreement") with the Industrial Development Corporation of Spokane County,
Washington (the "IDC") in connection with which the IDC issued $19.0 of
7.6% Solid Waste Disposal Revenue Bonds due 2027 (the "Bonds") and loaned
the proceeds to the Company to finance the construction of certain
qualifying expenditures at its Mead smelter, which are part of the
previously announced modernization and expansion of Mead's carbon baking
furnace.  The net proceeds from the sale of the Bonds of approximately
$18.6 were deposited into a restricted construction account (the balance of
which is included in Other assets) and may be withdrawn from time to time
by the Company, pursuant to the Loan Agreement and Bond indenture.  The
Loan Agreement requires the Company to make payments on the dates and in
the amounts required to permit the IDC to satisfy all of its payment
obligations under the Bonds and related indenture.

4.   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 lawsuits 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, 1997, the balance of such accruals,
which are primarily included in Long-term liabilities, was $30.8.  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 $8.0 for the years
1997 through 2001 and an aggregate of approximately $7.0 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.  The Company believes that it is reasonably
possible that costs associated with these environmental matters may exceed
current accruals by amounts that could range, in the aggregate, up to an
estimated $19.0.  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.  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
manufactured for at least 20 years.  At September 30, 1997, the number of
such claims pending was approximately 71,200, as compared with 71,100 at
December 31, 1996.  In 1996, approximately 21,100 of such claims were
received and 9,700 were settled or dismissed.  During the quarter and nine
months ended September 30, 1997, approximately 3,400 and 9,000 of such
claims were received and 6,500 and 8,900 of such claims were settled or
dismissed, respectively.

     Based on past experience and reasonably anticipated future activity,
the Company has established an accrual for estimated asbestos-related costs
for claims filed and estimated to be filed through 2008.  There are
inherent uncertainties involved in estimating asbestos-related costs, and
the Company's actual costs could exceed or be less than these estimates. 
The Company's accrual was calculated based on the current and anticipated
number of asbestos-related claims, the prior timing and amounts of
asbestos-related payments, and the advice of Wharton Levin Ehrmantraut
Klein & Nash, P.A. with respect to the current state of the law related to
asbestos claims.  Accordingly, an estimated asbestos-related cost accrual
of $156.8, before consideration of insurance recoveries, is included
primarily in Long-term liabilities at September 30, 1997.  While the
Company does not presently believe there is a reasonable basis for
estimating such costs beyond 2008 and, accordingly, no accrual has been
recorded for such costs which may be incurred beyond 2008, there is a
reasonable possibility that such costs may continue beyond 2008, and such
costs may be substantial.  The Company estimates that annual future cash
payments in connection with such litigation will be approximately $13.0 to
$20.0 for each of the years 1997 through 2001, and an aggregate of
approximately $86.0 thereafter.

     The Company believes that it has insurance coverage available to
recover a substantial portion of its asbestos-related costs.  Claims for
recovery from some of the Company's insurance carriers are currently
subject to pending litigation and other carriers have raised certain
defenses, which have resulted in delays in recovering costs from the
insurance carriers.  The timing and amount of ultimate recoveries from
these insurance carriers are dependent upon the resolution of these
disputes.  The Company believes, based on prior insurance-related
recoveries in respect of asbestos-related claims, existing insurance
policies, and the advice of Thelen, Marrin, Johnson & Bridges LLP with
respect to applicable insurance coverage law relating to the terms and
conditions of those policies, that substantial recoveries from the
insurance carriers are probable.  Accordingly, an estimated aggregate
insurance recovery of $127.9, determined on the same basis as the asbestos-
related cost accrual, is recorded primarily in Other assets at September
30, 1997.

     Management continues to monitor claims activity, the status of
lawsuits (including settlement initiatives), legislative progress, 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. 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, 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 9 of the Notes to Consolidated Financial Statements for the
year ended December 31, 1996.

5.   DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING PROGRAMS

     At September 30, 1997, the net unrealized loss, including unamortized
net option premiums, on the Company's position in aluminum forward sales
and option contracts, (based on an average price of $1,647 per ton* ($.75
per pound) of primary aluminum), natural gas and fuel oil forward purchase
and option contracts, and forward foreign exchange contracts, was
approximately $11.6.

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 fluctuations.  During the period from January 1, 1993, through 
---------------
*All references to tons in this report refer to metric tons of 2,204.6
pounds

September 30, 1997, the Average Midwest United States transaction price for
primary aluminum has ranged from approximately $.50 to $1.00 per pound. 
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.

     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 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
lock-in or 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
its anticipated sales, and/or (iii) to permit the Company to realize
possible upside price movements.  As of September 30, 1997, the Company had
sold forward, at fixed prices, approximately 17,300, 93,600 and 24,000 tons
of primary aluminum with respect to 1997, 1998 and 1999, respectively.  As
of September 30, 1997, the Company had also purchased put options to
establish a minimum price for approximately 42,100 and 52,000 tons of
primary aluminum with respect to 1997 and 1998, respectively, and had
entered into option contracts that established a price range for an
additional 51,000, 231,600 and 124,500 tons for 1997, 1998 and 1999,
respectively.

     As of September 30, 1997, the Company had sold forward virtually all
of the alumina available to it in excess of its projected internal smelting
requirements for 1997, 1998 and 1999 at prices indexed to future prices of
primary aluminum.

ENERGY
     The Company is exposed to energy price risk from fluctuating prices
for fuel oil and natural gas consumed in the production process. 
Accordingly, 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, 1997, the
Company had a combination of fixed price purchase and option contracts for
the purchase of approximately 44,000 MMBtu of natural gas per day during
the remainder of 1997, and for 41,000 MMBtu of natural gas per day for
1998. As of September 30, 1997, the Company also held a combination of
fixed price purchase and option contracts for an average of 228,000,
232,000 and 25,000 barrels of fuel oil per month for 1997, 1998, and 1999,
respectively.

FOREIGN CURRENCY
     The Company enters into forward exchange contracts to hedge material
cash commitments to foreign subsidiaries or affiliates.  At September 30,
1997, the Company had net forward foreign exchange contracts totaling
approximately $135.0 for the purchase of 175.5 Australian dollars from
October 1997 through December 1998, in respect of its commitments for 1997
and 1998 expenditures denominated in Australian dollars.  At September 30,
1997, KACC also held options to purchase approximately 10.0 Australian
dollars over the last three months of 1997.

     See Note 10 of the Notes to Consolidated Financial Statements for the
year ended December 31, 1996.

6.   RESTRUCTURING OF OPERATIONS

     The Company has previously disclosed that it set a goal of achieving
significant cost reductions and other profit improvements, with the full
effect planned to be realized in 1998 and beyond, measured against 1996
results.  The initiative is based on the Company's conclusion that the
level of performance of its existing facilities and businesses would not
achieve the level of profits the Company considers satisfactory based upon
historic long-term average prices for primary aluminum and alumina.  During
the second quarter of 1997, the Company recorded a $19.7 restructuring
charge to reflect actions taken and plans initiated to achieve the reduced
production costs, decreased corporate selling, general and administrative
expenses, and enhanced product mix intended to achieve this goal.  The
significant components of the restructuring charge are enumerated below.

ERIE PLANT DISPOSITION
     During the second quarter of 1997, the Company formed a joint venture
with a third party related to the assets and liabilities associated with
the wheel manufacturing operations at its Erie, Pennsylvania, fabrication
plant. Management subsequently decided to close the remainder of the Erie
plant in order to consolidate its aluminum forgings operations at two other
facilities for increased efficiency.  As a result of the joint venture
formation and plant closure, the Company recognized a net pre-tax loss of
approximately $1.4.

OTHER ASSET DISPOSITIONS
     As a part of the Company's profit enhancement and cost reduction
initiative, management made decisions regarding product rationalization and
geographical optimization, which led management to decide to dispose of
certain assets which had nominal operating contribution.  These strategic
decisions resulted in the Company recognizing a pre-tax charge for
approximately $15.6 associated with such asset dispositions.

EMPLOYEE AND OTHER COSTS
     As a part of the Company's profit enhancement and cost reduction
initiative, management concluded that certain corporate and other staff
functions could be consolidated or eliminated resulting in a second quarter
pre-tax charge of approximately $2.7 for benefit and other costs.

7.   COMPLETED ACQUISITION

     During June 1997, Kaiser Bellwood Corporation, a newly formed, wholly
owned subsidiary of the Company, completed the acquisition of Reynolds
Metals Company's Bellwood, Virginia, extrusion plant and its existing
inventories for a total purchase price (after post-closing adjustments) of
$41.6, consisting of cash payments of $38.4 and the assumption of
approximately $3.2 of employee related and other liabilities.  Upon
completion of the transaction, Kaiser Bellwood Corporation became a
subsidiary guarantor under the indentures in respect of the Company's
9-7/8% Senior Notes due 2002, 10-7/8% Series B and Series D Senior Notes
due 2006, and 12-3/4% Senior Subordinated Notes due 2003.

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, "Profit Enhancement and Cost Reduction Initiative,"
"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, 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, 1996, 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

     The Company has previously disclosed that it set a goal of
achieving significant cost reductions and other profit improvements, with
the full effect planned to be realized in 1998 and beyond, measured against
1996 results.  The initiative is based on the Company's conclusion that the
level of performance of its existing facilities and businesses would not
achieve the level of profits the Company considers satisfactory based upon
historic long-term average prices for primary aluminum and alumina.  During
the second quarter of 1997, the Company recorded a $19.7 million
restructuring charge to reflect actions taken and plans initiated to
achieve the reduced production costs, decreased corporate selling, general
and administrative expenses, and enhanced product mix intended to achieve
this goal.  See Note 6 of the Notes to Interim Consolidated Financial
Statements.

     During June 1997, Kaiser Bellwood Corporation, a newly formed, wholly
owned subsidiary of the Company, completed the acquisition of Reynolds
Metals Company's Bellwood, Virginia, extrusion plant and its existing
inventories for a total purchase price of $41.6 million.  See Note 7 of
Notes to Interim Consolidated Financial Statements.

     The Company currently anticipates that the Volta River Authority may
partially reduce its electric power allocation to the Company's 90% owned
Volta Aluminium Company Limited ("Valco") smelter facility in Ghana in
1998.  Informal discussions with local officials suggest that regional
rainfall has been insufficient to raise the level of the lake, from which
the facility receives its hydroelectric power, to maintain the current
level of power for the coming year.  Formal notice of Valco's 1998 power
allocation is expected on or about November 15, 1997.  Meetings are planned
with local officials for early November to discuss the situation.

RESULTS OF OPERATIONS

     The table on the following page provides selected operational and
financial information on a consolidated basis with respect to the Company
for the quarters and nine month periods ended September 30, 1997, and 1996. 
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 other facilities.  Intracompany shipments and sales are
excluded from the information set forth on the following page.

     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,
                                                  ------------------------------  ------------------------------
                                                            1997            1996            1997            1996
                                                  ------------------------------  ------------------------------
<S>                                               <C>             <C>             <C>             <C>
Shipments: (1)
     Alumina                                              579.2           598.6         1,457.0         1,506.7 
     Aluminum products:
          Primary aluminum                                 86.4            88.1           246.9           262.9 
          Fabricated aluminum products                    105.2            83.1           299.5           245.4 
                                                  ------------------------------  ------------------------------
               Total aluminum products                    191.6           171.2           546.4           508.3 
                                                  ==============================  ==============================
Average realized sales price:
     Alumina (per ton)                            $         200   $         187   $         196   $         199 
     Primary aluminum (per pound)                           .76             .67             .75             .69 
Net sales:
     Bauxite and alumina:
          Alumina                                 $       115.9   $       111.7   $       285.6   $       300.2 
          Other (2) (3)                                    27.1            25.8            80.2            77.2 
                                                  ------------------------------  ------------------------------
               Total bauxite and alumina                  143.0           137.5           365.8           377.4 
                                                  ------------------------------  ------------------------------
     Aluminum processing:
          Primary aluminum                                145.0           130.6           409.5           402.8 
          Fabricated aluminum products                    341.7           282.4           990.6           861.4 
          Other (3)                                         4.4             2.9            12.7            10.5 
                                                  ------------------------------  ------------------------------
               Total aluminum processing                  491.1           415.9         1,412.8         1,274.7 
                                                  ------------------------------  ------------------------------
                  Total net sales                 $       634.1   $       553.4   $     1,778.6   $     1,652.1 
                                                  ==============================  ==============================
Operating income (loss):
     Bauxite and alumina                          $         8.8   $        (2.1)  $        14.8   $         8.8 
     Aluminum processing (4)                               64.1            29.1           161.6           127.8 
     Corporate (5)                                        (18.3)          (15.6)          (53.4)          (47.8)
                                                  ------------------------------  ------------------------------
          Total operating income                  $        54.6   $        11.4   $       123.0   $        88.8 
                                                  ==============================  ==============================
Net income (loss)                                 $        18.4   $        (4.8)  $        37.3   $        15.7 
                                                  ==============================  ==============================
Capital expenditures                              $        25.9   $        39.2   $        94.7   $        91.1 
                                                  ==============================  ==============================

</TABLE>

[FN]
---------------------------------
(1)  In thousands of metric tons.
(2)  Includes net sales of bauxite.
(3)  Includes the portion of net sales attributable to minority interests
     in consolidated subsidiaries.
(4)  Operating income for the nine months ended September 30, 1997,
     includes a pre-tax charge of $15.1 related to restructuring of
     operations recorded in the quarter ended June 30, 1997.
(5)  Operating income for the nine months ended September 30, 1997,
     includes a pre-tax charge of $4.6 related to restructuring of
     operations recorded in the quarter ended June 30, 1997.
</FN>

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 it's hedging strategies.  Primary aluminum prices have historically
been subject to significant cyclical 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.

     During the first nine months of 1997, the Average Midwest United
States transaction price ("AMT Price") for primary aluminum remained
relatively stable generally in the $.75 - $.80 per pound range.  The AMT
Price for primary aluminum for the week ended October 31, 1997, was
approximately $.77 per pound.  This compares favorably to 1996 when the AMT
Price remained fairly stable generally in the $.70 - $.75 range through June
and then declined during the second half of the year, reaching a low of
approximately $.65 per pound for October 1996, before recovering late in
the year.

     See Note 5 of the Notes to Interim Consolidated Financial Statements
for a discussion of the Company's hedging activities.

QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1997, COMPARED TO QUARTER AND
NINE MONTHS ENDED SEPTEMBER 30, 1996

SUMMARY
     The Company reported net income of $18.4 million, for the third
quarter of 1997, compared to a net loss of $4.8 million, for the same
period of 1996. Net sales in the third quarter of 1997 totaled $634.1
million compared to $553.4 million in the third quarter of 1996.

     For the nine-month period ended September 30, 1997, net income was
$37.3 million, compared to net income of $15.7 million, for the nine-month
period ended September 30, 1996.  Net sales for the nine months ended
September 30, 1997, were $1,778.6 million compared to $1,652.1 million for
the first nine months of 1996.

     Results for the nine-month period ended September 30, 1997, include
the effect of certain non-recurring items including a $19.7 million
restructuring charge (discussed above), an approximate $12.5 million non-
cash tax benefit related to settlement of certain matters and a $5.8
million charge related to additional litigation reserves.  Excluding these
items, net income for the nine-month period ended September 30, 1997, would
have been approximately $40.6 million.

BAUXITE AND ALUMINA
     Net sales of alumina increased by 4% for the quarter ended September
30, 1997, from the comparable period in the prior year, as a result of a 7%
increase in average realized prices from the sale of alumina, offset by a
3% decline in alumina shipments.  Shipment volumes were down as compared to
the quarter ended September 30, 1996, primarily as a result of the timing
of shipments.  For the nine-month period ended September 30, 1997, net
segment sales declined by 3% from the comparable period in the prior year. 
This change was due to a 2% decrease in average realized prices between
periods and a 3% reduction in alumina shipments.

     Segment operating income improved substantially on a quarter to
quarter basis and, to a lesser extent, for the comparative nine month
periods as well.  On a quarterly basis, the improvement resulted primarily
from improvements in average realized prices and operating efficiencies and
reduced raw material and energy prices.  On a year-to-date basis, these
improvements were somewhat offset by the impact of reductions in both the
average realized alumina price and alumina shipments as discussed above.

ALUMINUM PROCESSING
     Net sales of primary aluminum for the quarter ended September 30,
1997, increased by 11% from the comparable prior year period as a result of
a 13% increase in average realized prices offset by a 2% decrease in
shipments.  Net sales of fabricated aluminum products for the quarter ended
September 30, 1997, were up 21% as compared to the prior year period as a
result of a 27% increase in shipments offset by a 4% decrease in average
realized prices.  The increase in fabricated aluminum product shipments
over the third quarter of 1996 was the result of the Company's June 1997
acquisition of an extrusion facility in Bellwood, Virginia, as well as 
increased international sales of can sheet and increased shipments of heat-
treated products.

     For the nine-month period ended September 30, 1997, net sales for the
aluminum processing segment increased by approximately 11% from the
comparable prior year period primarily as a result of a 15% increase in
fabricated aluminum product net sales.  The increase in fabricated product
net sales resulted from the same shipment and price factors discussed in
the preceding paragraph.  Net sales of primary aluminum for the nine-month
period ended September 30, 1997, were basically flat as compared to the
prior year as reduced shipments for the period were offset by an increase
in the average realized price.

     In addition to being affected by the price and volume factors
discussed above, the aluminum processing segment's operating income for the
nine months ended September 30, 1997, also benefited from reduced power,
raw material and supply costs as well as improved operating efficiencies. 
In addition, the segment's operating income for the quarter and nine month
period ended September 30, 1997, includes approximately $2.7 million and
$7.5 million of operating income realized during the periods, related to
the settlement of certain issues related to energy service contracts. 
Operating income for the nine-month period ended September 30, 1997, also
includes a $15.1 million second quarter charge resulting from the
restructuring of operations.

CORPORATE
     Corporate operating expenses represent corporate general and
administrative expenses, which are not allocated to the Company's business
segments.  Operating results for the nine-month period ended September 30,
1997, includes a pre-tax charge of approximately $4.6 million associated
with the Company's restructuring of operations.

LIQUIDITY AND CAPITAL RESOURCES

OPERATING ACTIVITIES
     At September 30, 1997, the Company had working capital of $474.8
million, compared with working capital of $409.3 million at December 31,
1996.  The increase in working capital was due primarily to an increase in
Receivables and a decrease in Accounts payable partially offset by a
decrease in Cash and cash equivalents.

INVESTING ACTIVITIES
     Capital expenditures during the quarter and nine months ended
September 30, 1997, were $25.9 million and $94.7 million, respectively, and
were used primarily to acquire the Bellwood extrusion facility from
Reynolds, improve production efficiency, reduce operating costs, expand
capacity at existing facilities, and construct new facilities.  The
Company's first Micromill(TM) facility, which was constructed in Nevada
during 1996 as a demonstration and production facility, achieved
operational start-up by year-end 1996.  The facility remained in a start-up
mode during the first nine months of 1997 as the Company continued its
efforts to implement the Micromill(TM) technology on a full scale basis.
While the Micromill(TM) technology has not yet been fully implemented or
commercialized, and no assurances can be given that the Company will
ultimately be successful in this regards, the Company currently expects to
commence limited product shipments to customers in the fourth quarter of
1997.

     Total consolidated capital expenditures (of which approximately 7% is
expected to be funded by the Company's minority partners in certain foreign
joint ventures) are expected to be between $70.0 and $140.0 million per
annum in each of 1997 through 1999.  Management continues to evaluate
numerous projects all of which require substantial capital, including the
Company's Micromill(TM) project, and other potential opportunities both in
the United States and overseas.

     Subsequent to September 30, 1997, a joint decision was made by a
subsidiary of the Company and its joint venture partner to terminate and
dissolve the Sino-foreign aluminum joint venture in which the subsidiary had
invested approximately $9.0 million in 1995.  Under the terms of the joint
venture agreement and Chinese law, a distribution of the joint venture's
net assets is to be made to each of the parties in respect of their
individual ownership interests.  The amount that will ultimately be received
upon dissolution and the associated terms of any payments are the subject of
ongoing negotiations and is subject to certain governmental approvals by
officials of the People's Republic of China.

FINANCING ACTIVITIES AND LIQUIDITY

     At September 30, 1997, the Company had long-term debt of $972.0
million, compared with $961.9 million at December 31, 1996.  The change in
long-term debt between periods is primarily the result of $19.0 million of
proceeds from the Spokane County, Washington, Solid Waste Disposal Revenue
Bonds, which were loaned to the Company to finance certain qualifying
capital expenditures at its Mead smelter, offset by scheduled payments of
the current portion of long-term debt.

     At September 30, 1997, $273.8 million (of which $73.8 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 and nine
month period ended September 30, 1997, the average per annum interest rates
on loans outstanding under the Credit Agreement were approximately 9.0% and
9.5%, respectively.  The Credit Agreement does not permit the Company to
pay any dividends on its common stock.

     Upon completion of the acquisition of the Bellwood facility, Kaiser
Bellwood Corporation became a subsidiary guarantor under the indentures in
respect of the Company's 9-7/8% Senior Notes due 2002, 10-7/8% Series B and
Series D Senior Notes due 2006, and 12-3/4% Senior Subordinated Notes due
2003.

     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.  Additionally, 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.

                        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 4 of the 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, 1996.

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 Amended and Restated Bylaws of KACC, dated October 1, 1997.

     *4.7 Eleventh Amendment to Credit Agreement and Limited Waivers, dated
          as of October 20, 1997, amending the Credit Agreement, dated as of
          February 15, 1994, as amended, among KACC, KAC, the financial
          institutions a party thereto, and BankAmerica Business Credit,
          Inc., as Agent.

     *27  Financial Data Schedule.

     (b)  Reports on Form 8-K.

     No report on Form 8-K was filed by the Company during the quarter
ended September 30, 1997.








---------------
*    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
                                                Vice President and 
                                              Chief Financial Officer
                                           (Principal Financial Officer)


                                             /s/  Daniel D. Maddox
                                        By: ----------------------------
                                                  Daniel D. Maddox
                                               Controller - Corporate
                                            Consolidation and Reporting
                                           (Principal Accounting Officer)



Dated:    November 5, 1997