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                          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, 2000

                            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.)


                  5847 SAN FELIPE, SUITE 2600, HOUSTON, TEXAS  77057
                   (Address of principal executive offices) (Zip Code)


                                    (713) 267-3777
                 (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, 2000, the registrant had 46,171,365 shares of
          Common Stock outstanding.



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           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,
                                                                                2000            1999
                                                                      ------------------------------
          <S>                                                         <C>             <C>
                                     ASSETS                             (Unaudited)
          Current assets:
               Cash and cash equivalents                              $        46.5   $        21.2
               Receivables:
                    Trade, net                                                200.9           154.1
                    Other                                                     176.1           112.8
               Inventories                                                    433.8           546.1
               Prepaid expenses and other current assets                      111.6           145.6
                                                                      ------------------------------
                    Total current assets                                      968.9           979.8
          Investments in and advances to unconsolidated affiliates             73.6            96.9
          Property, plant, and equipment - net                              1,128.1         1,053.7
          Deferred income taxes                                               462.7           438.2
          Other assets                                                        679.2           634.3
                                                                      ------------------------------
                         Total                                        $     3,312.5   $     3,202.9
                                                                      ==============================

                       LIABILITIES & STOCKHOLDERS' EQUITY
          Current liabilities:
               Accounts payable                                       $       258.3   $       231.7
               Accrued interest                                                24.8            37.7
               Accrued salaries, wages, and related expenses                   96.7            62.1
               Accrued postretirement medical benefit obligation -
                    current portion                                            51.5            51.5
               Other accrued liabilities                                      155.9           170.0
               Payable to affiliates                                           74.4            84.6
               Long-term debt - current portion                                 1.5              .3
                                                                      ------------------------------
                    Total current liabilities                                 663.1           637.9
          Long-term liabilities                                               830.0           727.3
          Accrued postretirement medical benefit obligation                   668.9           678.3
          Long-term debt                                                      957.8           972.5
          Minority interests                                                   98.3            96.7
          Redeemable preference stock                                          17.7            19.5
          Commitments and contingencies
          Stockholders' equity:
               Preference stock                                                  .7             1.5
               Common stock                                                    15.4            15.4
               Additional capital                                           2,268.6         2,173.0
               Accumulated deficit                                           (198.9)         (205.1)
               Accumulated other comprehensive income - additional
                    minimum pension liability                                  (1.2)           (1.2)
               Less:  Note receivable from parent                          (2,007.9)       (1,912.9)
                                                                      ------------------------------
                    Total stockholders' equity                                 76.7            70.7
                                                                      ------------------------------
                         Total                                        $     3,312.5   $     3,202.9
                                                                      ==============================

          </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,
                                                            ------------------------------  ------------------------------
                                                                      2000            1999            2000            1999
                                                            ------------------------------  ------------------------------
          <S>                                               <C>             <C>             <C>             <C>
          Net sales                                         $       537.1   $       520.3   $     1,645.3   $     1,524.7
                                                            ------------------------------  ------------------------------

          Costs and expenses:
               Cost of products sold                                461.6           458.9         1,401.5         1,392.7
               Depreciation and amortization                         19.8            20.9            59.0            69.4
               Selling, administrative, research and
                    development, and general                         25.2            28.4            77.3            82.6
               Labor settlement charge                               38.5             -              38.5             -
               Other non-recurring operating items, net             (10.9)            24.1           (22.5)           24.1
                                                            ------------------------------  ------------------------------
                         Total costs and expenses                   534.2           532.3         1,553.8         1,568.8
                                                            ------------------------------  ------------------------------

          Operating income (loss)                                     2.9           (12.0)           91.5           (44.1)

          Other income (expense):
               Interest expense                                     (27.0)          (27.3)          (83.6)          (82.4)
               Other - net                                           (5.0)          (21.9)           (1.4)          (19.3)
                                                            ------------------------------  ------------------------------

          Income (loss) before income taxes and minority
               interests                                            (29.1)          (61.2)            6.5          (145.8)


          Benefit (provision) for income taxes                       11.2            21.1            (2.5)           49.9

          Minority interests                                          1.2             1.3             2.5             4.1
                                                            ------------------------------  ------------------------------

          Net income (loss)                                 $       (16.7)  $       (38.8)  $         6.5   $       (91.8)
                                                            ==============================  ==============================

          </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 CASH FLOWS
                                     (Unaudited)
                               (In millions of dollars)

          <TABLE>
          <CAPTION>
                                                                             Nine Months Ended
                                                                               September 30,
                                                                      ------------------------------
                                                                                2000            1999
                                                                      ------------------------------
          <S>                                                         <C>             <C>
          Cash flows from operating activities:
               Net income (loss)                                      $         6.5   $       (91.8)
               Adjustments to reconcile net income (loss) to net cash
                    used by operating activities:
                    Depreciation and amortization (including deferred
                         financing costs of $3.3 and $3.2)                     62.3            72.6
                    Non-cash impairment and restructuring charges              22.3            19.1
                    Gains - real estate related (2000); sale of
                         interests in AKW L.P. (1999)                         (39.0)          (50.5)
                    Equity in loss (income) of unconsolidated
                         affiliates, net of distributions                      17.2            (2.0)
                    Minority interests                                         (2.5)           (4.1)
                    Increase in receivables                                  (110.1)           (5.0)
                    Decrease (increase) in inventories                        103.8           (10.7)
                    Decrease (increase) in prepaid expenses and other
                         current assets                                        21.6           (35.2)
                    (Decrease) increase in accounts payable
                         (associated with operating activities) and
                         accrued interest                                     (29.1)           10.3
                    Increase (decrease) in payable to affiliates and
                         other accrued liabilities                             24.2            (1.1)
                    Increase in accrued and deferred income taxes              (8.7)          (56.4)
                    Net (used) provided by long-term assets and
                         liabilities                                          (27.2)           28.2
                    Other                                                      14.2             (.9)
                                                                      ------------------------------
                         Net cash provided (used) by operating
                              activities:                                      55.5          (127.5)
                                                                      ------------------------------
          Cash flows from investing activities:
               Capital expenditures                                          (196.5)          (40.3)
               Increase in accounts payable - Gramercy-related
                    capital expenditures                                       42.9             -
               Gramercy-related property damage insurance recoveries           73.0             -
               Net proceeds from disposition of property and
                    investments                                                66.5            70.4
               Other                                                            1.3              .1
                                                                      ------------------------------
                         Net cash (used) provided by investing
                              activities                                      (12.8)           30.2
                                                                      ------------------------------
          Cash flows from financing activities:
               (Repayments) borrowings under revolving credit
                    facility, net                                             (10.4)            7.7
               Repayments of long-term debt                                    (4.3)            (.4)
               Capital stock issued                                             -               1.4
               Decrease in restricted cash, net                                 -                .7
               Dividends paid                                                   (.3)            (.4)
               Redemption of minority interests' preference stock              (2.4)           (1.4)
                                                                      ------------------------------
                         Net cash (used) provided by financing
                              activities                                      (17.4)            7.6
                                                                      ------------------------------
          Net increase (decrease) in cash and cash equivalents during
               the period                                                      25.3           (89.7)
          Cash and cash equivalents at beginning of period                     21.2            98.3
                                                                      ------------------------------
          Cash and cash equivalents at end of period                  $        46.5   $         8.6
                                                                      ==============================
          Supplemental disclosure of cash flow information:
               Interest paid, net of capitalized interest             $        93.2   $        91.8
               Income taxes paid                                                9.6            11.2

          </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 the rules and regulations of 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, 1999.  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, 2000, are not necessarily indicative of the
          results that may be expected for the year ending December 31,
          2000.

          LABOR DISPUTE, SETTLEMENT AND RELATED COSTS
               As previously reported, prior to the settlement of the labor
          dispute discussed below, the Company was operating five of its
          U.S. facilities with salaried employees and other employees 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.  The labor dispute was settled in
          September 2000.  A significant portion of the issues were settled
          through direct negotiations between the Company and the USWA and
          the remaining issues were settled pursuant to an agreed-upon
          arbitration process.  Under the terms of the settlement, USWA
          members generally returned to the affected plants during October
          2000.  The new labor contract, which expires in September 2005,
          provides for a 2.6% average annual increase in the overall wage
          and benefit packages, results in the reduction of at least 540
          hourly jobs at the five facilities (from approximately 2,800 on
          September 30, 1998), allows the Company greater flexibility in
          using outside contractors and provides for productivity gains by
          allowing the Company to utilize the knowledge obtained during the
          labor dispute without many of the work-rule restrictions that
          were a part of the previous labor contract.  The Company has
          recorded a one-time pre-tax charge of $38.5 in its results for
          the quarter ended September 30, 2000, to reflect the incremental,
          non-recurring impacts of the labor settlement, including
          severance and other contractual obligations for non-returning
          workers.

               During the period of the strike and subsequent lock-out, the
          Company continued to accrue certain benefits (such as pension and
          other postretirement benefit costs/liabilities) for the USWA
          members, which accruals were based on the terms of the previous
          USWA contract.  The difference between the amounts accrued for
          the returning workers and the amounts agreed to in the settlement
          with the USWA will result in an approximate $33.6 increase in the
          Company's accumulated pension obligation and an approximate $33.4
          decrease in the Company's accumulated other postretirement
          benefit obligations.  In accordance with generally accepted
          accounting principles, these amounts will be amortized to expense
          over the employees' expected remaining years of service.

               As a part of the USWA settlement agreement, the Company has
          agreed to redeem all of its Cumulative (1985 Series A) and
          Cumulative (1985 Series B) Preference Stock (approximately
          353,800 shares outstanding at September 30, 2000).  The total
          cash required to complete the redemption is approximately $17.7.
          Approximately $12.0 has previously been funded into redemption
          funds (included in Other assets).  The redemption is expected to
          be completed late in the first quarter of 2001.

          RECENT ACCOUNTING PRONOUNCEMENTS
               In June 1998, the Financial Accounting Standards 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
          resulting from the "mark-to-market" process will represent
          unrealized gains or losses.  Such unrealized gains or losses may
          change, based on prevailing market prices at each subsequent
          balance sheet date, until the transaction date occurs.  Such
          changes will be reflected as an increase or reduction in
          stockholders' equity through either comprehensive income or net
          income, depending on the nature of the hedging instrument used.
          To the extent that changes in fair value of the Company's hedging
          positions are initially recorded in other comprehensive income,
          such changes will reverse out of other comprehensive income (net
          of any fluctuations in other "open" positions) and will be
          reflected in net income when the subsequent physical transactions
          occur.  As of September 30, 2000, the amount of the Company's other
          comprehensive income adjustments are not significant so there is
          not a significant difference between net income and comprehensive
          income.  However, differences between comprehensive income and
          net income may become significant in future periods as a result of
          SFAS No. 133.  In general, SFAS No. 133 will result in material
          fluctuations in comprehensive income, net 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 is required on or before January 1,
          2001.  The Company plans to implement SFAS No. 133 as of January
          1, 2001.

          2.   INCIDENT AT GRAMERCY FACILITY

               In July 1999, the Company's Gramercy, Louisiana alumina
          refinery was extensively damaged by an explosion in the digestion
          area of the plant.  A number of employees were injured in the
          incident, several of them severely.  As a result of the incident,
          alumina production at the facility was completely curtailed.
          Construction on the damaged part of the facility began during the
          first quarter of 2000.  Initial production at the plant is
          currently expected to commence during the middle of the fourth
          quarter of 2000.  Based on current estimates, full production is
          expected to be achieved during the first quarter of 2001.  The
          Company has received the regulatory permits required to operate
          the plant once the facility is ready to resume production.

               The cause of the incident is under investigation by the
          Company and governmental agencies.  The U.S. Mine Safety and
          Health Administration ("MSHA") has issued 24 citations and
          proposed that the Company be assessed a penalty of $.5 in
          connection with its investigation of the incident.  The citations
          allege, among other things, that certain aspects of the plant's
          operations were unsafe and that such mode of operation
          contributed to the explosion.  The Company disagrees with the
          substance of the citations and has challenged them and the
          associated penalty.  It is possible that other civil or criminal
          fines or penalties could be levied against the Company.  However,
          as more fully explained below, based on what is known to date and
          discussions with the Company's advisors, the Company believes
          that the financial impact of this incident on operating results
          (in excess of insurance deductibles and self-retention
          provisions) will be largely offset by insurance coverage.
          Deductibles and self-retention provisions under the insurance
          coverage for the incident total $5.0, which amounts were charged
          to Other non-recurring operating items, net (see Note 8) in the
          third quarter of 1999.

               The Company has significant amounts of insurance coverage
          related to the Gramercy incident.  The Company's insurance
          coverage has five separate components: property damage, clean-up
          and site preparation, business interruption, liability and
          workers' compensation.  The insurance coverage components are
          discussed below.

               Property Damage.  The Company's insurance policies provide
          that it 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.  In 1999, based on discussions with the insurance
          carriers and their representatives and third party engineering
          reports, the Company recorded a minimum expected property damage
          reimbursement amount of $100.0.  The amount was classified as a
          receivable in Other assets, as such proceeds, when received, are
          being invested in property, plant and equipment.

               During the quarter and nine-month periods ended September
          30, 2000, Gramercy-related capital spending was approximately
          $102.0 and $159.0, respectively.  During the quarter and nine-
          month periods ended September 30, 2000, $49.0 and $73.0 of the
          insurance proceeds received were recorded as a reduction of the
          minimum property damage receivable based on the percentage of
          minimum expected costs to be funded by insurance proceeds to the
          total rebuild costs estimated at the beginning of the project.
          The balance of the minimum property damage receivable of $27.0 is
          expected to be reduced during the last three months of 2000 as
          insurance recoveries are received and construction continues.

               Clean-up and Site Preparation.  The Gramercy facility
          incurred incremental costs for clean-up and other activities
          during 1999 and has continued to incur such costs during 2000.
          These clean-up and site preparation activities have been offset
          by accruals of approximately $25.0, of which $.1 and $11.0 were
          accrued during the quarter and nine-month periods ended September
          30, 2000, respectively, for estimated insurance recoveries.

               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 sister
          facility in Jamaica, which supplies bauxite to Gramercy, will
          continue to incur operating expenses until full production at the
          Gramercy facility is restored.  The Company will also incur
          increased costs as a result of 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.
          The excess cost of such open market purchases is expected to be
          substantially offset by insurance recoveries.  However, if
          certain sublimits within the Company's insurance coverage were
          deemed to apply, the Company's results could be negatively
          affected. In consideration of the foregoing items, as of
          September 30, 2000, the Company had recorded expected business
          interruption insurance recoveries totaling $130.6, of which $23.8
          and $89.6 were recorded during the quarter and nine-month periods
          ended September 30, 2000, respectively, as a reduction of Cost of
          products sold.  These amounts substantially offset actual
          expenses incurred during the periods.  Such business interruption
          insurance amounts represent estimates of the Company's business
          interruption coverage based on discussions with the insurance
          carriers and their representatives and are therefore subject to
          change.

               Depreciation expense for the first six months of 1999 was
          approximately $6.0.  The Company suspended depreciation at the
          facility starting in July 1999 since production had been
          completely curtailed.  However, in accordance with an agreement
          with the Company's insurers, during the third quarter of 2000,
          the Company recorded a depreciation charge of $12.8 representing
          the previously unrecorded depreciation related to the undamaged
          portion of the facility for the period from July 1999 through
          September 2000.  However, this charge did not have any impact on
          the Company's operating results as the Company has reflected (as
          a reduction of depreciation expense) an equal and offsetting
          insurance receivable (incremental to the amounts discussed in the
          preceding paragraph) since the insurers have agreed to reimburse
          the Company this amount.  Once production at the facility is
          restored, normal depreciation will commence.  Such depreciation
          is expected to exceed prior historical rates primarily due to the
          capital costs on the newly constructed assets.

               Liability.  The incident has also resulted in more than
          ninety individual and class action lawsuits being filed against
          the Company and others alleging, among other things, property
          damage, business interruption losses by other businesses and
          personal injury.  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.  While it is presently impossible to
          determine the aggregate amount of claims that may be incurred,
          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.  From the date of the
          Gramercy incident through September 30, 2000, the Company had
          expended or incurred costs or losses associated with the Gramercy
          incident (that were not capital expenditures) totaling $155.6,
          consisting of clean-up, site preparation and business
          interruption costs.  From the date of the Gramercy incident
          through September 30, 2000, $134.0 of insurance recoveries
          related to these costs had been received.  In addition, during
          the second and third quarters of 2000, the Company spent
          approximately $150.0 on Gramercy-related construction activities
          and received insurance recoveries of $73.0 for capital
          expenditures related to the minimum property damage receivable.
          Gramercy-related capital spending prior to the second quarter of
          2000 was not significant.  The Company continues to work with the
          insurance carriers to maximize the amount of recoveries and to
          minimize, to the extent possible, the period of time between when
          the Company expends funds and when it is reimbursed.  However,
          the Company will likely have to continue to fund an average of 30
          - 60 days of property damage and business interruption activity,
          unless some other arrangement is agreed with the insurance
          carriers, and such amounts will be significant.  The Company
          believes it has sufficient financial resources to fund the
          remaining construction and business interruption costs on an
          interim basis.  However, no assurances can be given in this
          regard.

               Other.  During the third quarter of 2000, the Company
          incurred approximately $11.5 of normal recurring maintenance
          expenditures for the Gramercy facility (which amounts were
          reflected in Other non-recurring operating items, net - see Note
          8) that otherwise would have been incurred in the ordinary course
          of business over the next 1 to 3 years.  The Company chose to
          incur these expenditures now to avoid normal operational outages
          that otherwise would have occurred once the facility resumes
          production.

          3.   INVENTORIES

               The classification of inventories is as follows:



          <TABLE>
          <CAPTION>

                                                                               September 30,    December 31,
                                                                                        2000            1999
                                                                              ------------------------------
             <S>                                                              <C>             <C>
             Finished fabricated aluminum products                            $         86.6  $        118.5
             Primary aluminum and work in process                                      134.9           189.4
             Bauxite and alumina                                                        91.8           124.1
             Operating supplies and repair and maintenance parts                       120.5           114.1
                                                                              ------------------------------
                  Total                                                       $        433.8  $        546.1
                                                                              ==============================

          </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.

               Inventories at September 30, 2000, have been reduced by a
          $7.5 LIFO charge primarily associated with the Company's exit
          from the can body stock product line (which amount was reflected
          in Other non-recurring operating items, net - see Note 8) in the
          third quarter of 2000.

          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 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, 2000,
          the balance of such accruals, which are primarily included in
          Long-term liabilities, was $44.9.  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 $11.0 for the years 2000 through 2004 and an aggregate of
          approximately $19.0 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 $43.0.  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.

               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, 2000, the number of
          such claims pending was approximately 114,700, as compared with
          100,000 at December 31, 1999. During 1999, approximately 29,300
          of such claims were received and 15,700 were settled or
          dismissed.  During the quarter and nine-month periods ended
          September 30, 2000, approximately 6,100 and 20,800 of such claims
          were received and 1,400 and 6,100 of such claims were settled or
          dismissed.  The foregoing claim and settlement figures as of and
          for the quarter and nine-month periods ended September 30, 2000,
          do not reflect the fact that as of September 30, 2000, the
          Company had reached agreements under which it expects to settle
          approximately 74,200 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 2010).  The
          Company's estimate is based on the Company's view, at each
          balance sheet date, of the current and an 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
          2010 and, accordingly, no accrual has been recorded for any costs
          which may be incurred beyond 2010, the Company expects that such
          costs may continue beyond 2010, and that such costs could be
          substantial.  As of September 30, 2000, an estimated asbestos-
          related cost accrual of $538.6, before consideration of insurance
          recoveries, has been reflected in the accompanying interim
          consolidated financial statements primarily in Long-term
          liabilities.  The Company estimates that annual future cash
          payments for asbestos-related costs will be approximately $60.0
          in the fourth quarter of 2000 and will range from approximately
          $100.0 to $125.0 in the years 2001 and 2002, approximately $50.0
          for each of the years 2003 and 2004, and an aggregate of
          approximately $160.0 thereafter.  For the period from inception
          through September 30, 2000, before consideration of insurance
          recoveries, a total of approximately $168.6 of asbestos-related
          settlement and related legal costs have been paid, including
          approximately $47.7 in the nine-month period ended September 30,
          2000.

               The Company believes 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.  For the period from
          inception through September 30, 2000, partial insurance
          reimbursements for asbestos-related matters totaling
          approximately $105.0 have been received, including $36.5 in the
          nine-month period ended September 30, 2000.  The timing and
          amount of future recoveries from 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 additional
          recoveries from the insurance carriers 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 LLP with respect to applicable insurance
          coverage law relating to the terms and conditions of those
          policies.  Accordingly, an estimated aggregate insurance recovery
          of $428.0, determined on the same basis as the asbestos-related
          cost accrual, is recorded primarily in Other assets at September
          30, 2000.  However, no assurance can be given that the Company
          will be able to record 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.  In the third quarter of 2000,
          this process resulted in the Company reflecting a $43.0 charge
          (included in Other income  (expense) - see Note 8), 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, which was settled in September 2000, 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 believes 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, D.C.  In April 2000,
          the Company was notified by the general counsel of the NLRB of
          the dismissal of twenty-two of twenty-four allegations of ULPs
          previously brought against it by the USWA.  In June 2000, the
          general counsel of the NLRB directed the Oakland Regional Office
          to issue a complaint on two allegations for trial before an
          administrative law judge.  The Regional Office issued such a
          complaint in late June 2000.  A trial date has been set for
          November 2000.  Any outcome from the trial before the
          administrative law judge would be subject to an additional appeal
          by the general counsel of the NLRB, the USWA or the Company.
          This process could take months or years.  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.  The Company
          continues to believe that the charges are without merit.  While
          uncertainties are inherent in matters such as this and it is
          presently impossible to determine the actual costs, if any, that
          may ultimately arise in connection with this matter, the Company
          does not believe that the ultimate outcome of this matter will
          have a material adverse impact on the Company's liquidity or
          financial position.  However, amounts paid, if any, in
          satisfaction of this matter could be significant to the results
          of the period in which they are recorded.

          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 11 of Notes to Consolidated Financial Statements
          for the year ended December 31, 1999.

          5.   DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING
          PROGRAMS

               At September 30, 2000, 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 and option
          contracts, was approximately $35.0 (based on 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, 2000, the Company had entered into option contracts
          that established a price range for 68,000, 362,000 and 183,000
          tons* of primary aluminum with respect to 2000, 2001 and 2002,
          respectively.

               Additionally, as of September 30, 2000, the Company had also
          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 2,000 tons of primary
          aluminum per month during the period October 2000 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 4,000 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.
          ---------------
          *   All references to tons in this report refer to metric tons of
          2,204.6 pounds.


          Accordingly, these positions will be "marked-to-market" each
          period.  See Note 8 for mark-to-market pre-tax gains (losses)
          associated with the transactions described in this paragraph for
          the quarter and nine-month periods ended September 30, 2000 and
          1999.

               As of September 30, 2000, the Company had sold forward
          virtually all of the alumina available to it in excess of its
          projected internal smelting requirements for 2000, 2001 and 2002
          at prices indexed to future prices of primary aluminum.

          ENERGY
               The Company is exposed to energy price risk from fluctuating
          prices for fuel oil, diesel oil and natural gas 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, 2000, the Company held option
          contracts for the purchase of approximately 20,000 MMBtu of
          natural gas per day for the period October 2000 through December
          2000 and 30,000 MMBtu of natural gas per day for the period
          January 2001 through June 2001.  As of September 30, 2000, the
          Company also held a combination of fixed price purchase and
          option contracts for an average of 232,000 barrels per month of
          fuel oil for the remainder of 2000.

          FOREIGN CURRENCY
               The Company enters into forward exchange contracts to hedge
          material cash commitments to foreign subsidiaries or affiliates.
          At September 30, 2000, the Company had net forward foreign
          exchange contracts for the purchase of 120.5 Australian dollars
          in respect of its Australian dollar dominated commitments from
          October 2000 through June 2001.  In addition, the Company has
          entered into option contracts that establish a price range for
          the purchase of 24.0 Australian dollars for the period from
          October 2000 through June 2001 and option contracts that
          establish a ceiling on the purchase of 224.0 Australian dollars
          for the period from August 2001 through December 2005.

               See Note 12 of the Notes to Consolidated Financial
          Statements for the year ended December 31, 1999.

          6.   CHANDLER ACQUISITION

               In May 2000, the Company acquired the assets of a drawn tube
          aluminum fabricating operation in Chandler, Arizona.  Total
          consideration for the acquisition was $16.1, consisting of cash
          payments of $15.1 and assumed current liabilities of $1.0.  The
          purchase price was allocated to the assets acquired based on
          their estimated fair values, of which approximately $1.1 was
          allocated to property, plant and equipment and $2.8 was allocated
          to receivables, inventory and prepaid expenses.  The excess of
          the purchase price over the fair value of the assets acquired
          (goodwill) was approximately $12.2 and is being amortized on a
          straight-line basis over 20 years.  The acquisition is part of
          the Company's continued emphasis on its Engineered products
          business unit.  Total revenues for the Chandler facility were
          approximately $13.8 for the year ended December 31, 1999
          (unaudited).

          7.   WASHINGTON SMELTERS' POWER SALES AND OPERATING LEVEL

               As previously announced, during August 2000, the Company
          sold certain power that it had under contract for the third
          quarter of 2001.  The power sold was in excess of the Company's
          current and expected future operating requirements and resulted
          in net proceeds and a net pre-tax gain of approximately $40.5 in
          the third quarter of 2000.  This power sale had no impact on the
          Company's current level of operations.

               As previously reported, during June 2000, as a result of
          unprecedented high market prices for power in the Pacific
          Northwest, the Company temporarily curtailed approximately
          128,000 tons of its 273,000 annual primary aluminum production
          capacity at the Tacoma and Mead, Washington smelters and sold 100
          megawatts of power that it had under contract through June 30,
          2001.  As a result of the curtailment, the Company will avoid the
          need to purchase power on a variable market price basis.  The
          sale of power is expected to substantially mitigate the cash
          impact of the potline curtailment over the contract period for
          which the power was sold.  To implement the curtailment, the
          Company temporarily curtailed the two and one-half operating
          potlines at its Tacoma smelter and two and one-half out of a
          total of eight potlines at its Mead smelter.  One-half of a
          potline at the Tacoma smelter was already curtailed.  As a result
          of this sale of the power, the Company recorded a net pre-tax
          gain of approximately $15.8 in the second quarter of 2000, which
          amount was composed of gross proceeds of $31.3 offset by
          incremental excess power costs in the second quarter, employee
          termination expenses and other fixed commitments.

               Both net gains have been reflected (in their respective
          periods) in Other non-recurring operating items, net (see Note
          8).

               During October 2000, the Company signed a new power contract
          with the Bonneville Power Administration ("BPA") under which the
          BPA will provide the Company's operations in the State of
          Washington with power during the period October 2001 through
          September 2006.  The contract will provide the Company with
          sufficient power to fully operate the Company's Trentwood
          facility as well as approximately 40% of capacity at the
          Company's Mead and Tacoma aluminum smelting operations.  Power
          costs under the new contract will exceed the cost of power under
          the Company's current BPA contract by approximately 20%.
          Additional provisions of the new BPA contract include a take-or-
          pay requirement, an additional cost recovery mechanism under
          which the Company's base power rate could be increased and a
          "good corporate citizen" clause, under which the Company's power
          allocation could be curtailed in certain instances.  The Company
          has the right to terminate the contract until certain pricing and
          other provisions of the BPA contract are finalized, which is
          expected to be mid-2001.

          8.   OTHER NON-RECURRING ITEMS

          NON-RECURRING OPERATING ITEMS, NET (OTHER THAN LABOR SETTLEMENT)
               The income (loss) impact associated with non-recurring
          operating items, net, other than the labor settlement charge, for
          the quarter and nine-month periods ended September 30, 2000 and
          1999, was as follows:

          <TABLE>
          <CAPTION>
                                                                          Quarter Ended                 Nine-Months Ended
                                                                          September 30,                   September 30,
                                                                 ------------------------------  ------------------------------
                                              Business Segment             2000            1999            2000            1999
                                             -----------------   --------------  --------------  --------------  --------------
          <S>                                <C>                 <C>             <C>             <C>             <C>
          Net gains on power sales (Note 7)  Primary Aluminum    $        40.5   $         -     $        56.3   $         -
          Gramercy related items:
               Incremental maintenance
                    spending (Note 2)        Bauxite & Alumina           (11.5)            -             (11.5)            -
               Insurance deductibles, etc.   Bauxite & Alumina             -              (4.0)            -              (4.0)
                    (Note 2)                 Corporate                     -              (1.0)            -              (1.0)
          Impairment charges associated with
               product line exits:
               LIFO inventory charge (Note 3)Flat-Rolled                  (7.5)            -              (7.5)            -
                                             Products
               Other impairment charges      Flat-Rolled                  (1.5)            -              (1.5)            -
                                             Products                     (4.0)            -              (4.7)            -
                                             Engineered
                                             Products
          Restructuring charges              Primary Aluminum             (3.1)            -              (3.1)            -
                                             Corporate                    (2.0)            -              (5.5)            -
          Micromill impairment               Micromill                     -             (19.1)            -             (19.1)
                                                                 ------------------------------  ------------------------------
                                                                 $        10.9   $       (24.1)  $        22.5   $       (24.1)
                                                                 ==============================  ==============================

          </TABLE>

               The $1.5 impairment charge reflected by the Company's Flat-
          Rolled products segment in the third quarter of 2000 reduces the
          carrying value of certain assets to their estimated net
          realizable value as a result of the segment's previously
          announced decision to exit the can body stock product line.  The
          $4.0 impairment charge recorded by the Company's Engineered
          products segment in the third quarter of 2000 reduces the
          carrying value of certain machining facilities and assets, which
          are no longer required as a result of the segment's decision to
          exit a marginal product line, to their estimated net realizable
          value.  During the second quarter of 2000, the Engineered
          products segment recorded an additional severance-related charge
          of $.7 related to this product line exit.

               The restructuring charges recorded by the Company's Primary
          aluminum segment in the third quarter of 2000 represent employee
          benefit and other costs for approximately 50 job eliminations
          reflecting a reduced emphasis on technology sales and reduced
          salaried employee requirements at the Company's Tacoma facility,
          given its current curtailment.  The Corporate portion of the
          restructuring charges recorded in the quarter and nine-month
          periods ended September 30, 2000, represent employee benefit and
          other costs associated with the consolidation or elimination of
          certain corporate staff functions.  The Corporate restructuring
          initiatives in 2000 involve a group of approximately 50
          employees.

               See Note 4 of the Notes to Consolidated Financial Statements
          for the year ended December 31, 1999, for a discussion of the
          write-down of Micromill assets.

          OTHER INCOME (EXPENSE)
               Amounts included in other income (expenses), other than
          interest expense, for the quarter and nine-month periods ended
          September 30, 2000 and 1999, included the following pre-tax gains
          (losses):

          <TABLE>
          <CAPTION>
                                                                           Quarter Ended                  Nine Months Ended
                                                                           September 30,                    September 30,
                                                                  ------------------------------   ------------------------------
                                                                            2000             1999            2000             1999
                                                                  --------------   --------------  --------------   --------------
          <S>                                                     <C>              <C>             <C>              <C>
          Asbestos-related charges (Note 4)                       $       (43.0)   $       (15.2)  $       (43.0)   $       (53.2)
          Gain on sale of Pleasanton complex                               22.0               -             22.0               -
          Lease obligation adjustment                                      17.0               -             17.0               -
          Mark-to-market gains (losses) (Note 5)                             .9             (5.9)            9.6            (20.0)
          Gain on sale of interests in AKW L.P.                              -                -               -              50.5
          All other, net                                                   (1.9)             (.8)           (7.0)             3.4
                                                                  --------------   --------------  --------------   --------------
                                                                  $        (5.0)   $       (21.9)  $        (1.4)   $       (19.3)
                                                                  ==============   ==============  ==============   ==============

          </TABLE>

               During September 2000, the Company sold its Pleasanton,
          California, office complex because the administrative and
          research and development functions located there had been or are
          being relocated to other Kaiser locations and the
          complex had become surplus to the Company's needs.  Net proceeds
          from the sale were approximately $51.6.

               The net lease obligation adjustment recorded in the third
          quarter of 2000 relates to a building in which the
          Company has not maintained offices for a number of years, but for
          which it is responsible for lease payments as master
          tenant through 2008 under a 1983 sale-and-leaseback agreement.
          The Company's recorded liability represents its long-term
          obligation under the master lease, net of estimated sublease
          income (included in Long-term liabilities). During the
          third quarter of 2000, the Company adjusted the net lease
          obligation to reflect new third-party sublease agreements in
          2000 which resulted in occupancy and lease rates above those
          previously projected.

               During the quarter ended March 31, 2000, the Company, in the
          ordinary course of business, sold certain non-operating
          properties for total proceeds of approximately $12.0.  The sale
          did not have a material impact on the
          Company's operating results for the nine-month period ended
          September 30, 2000 (included in All other, net above).

               See Note 3 of the Notes to Consolidated Financial Statements
          for the year ended December 31, 1999, for a discussion
          of the sale of interests in AKW L.P.

          9.   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, 1999.  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 13 of Notes to Consolidated
          Financial Statements for the year ended December 31, 1999.

          Financial information by operating segment for the quarter and
          nine-month periods ended September 30, 2000 and 1999 is
          as follows:

          <TABLE>
          <CAPTION>
                                                                     Quarter Ended                 Nine Months Ended
                                                                     September 30,                   September 30,
                                                            ------------------------------  ------------------------------
                                                                      2000            1999            2000            1999
          --------------------------------------------------------------------------------  ------------------------------
          <S>                                              <C>              <C>             <C>             <C>
          Net Sales:
               Bauxite and Alumina: (1)
                    Net sales to unaffiliated customers     $       106.7   $       108.3   $       327.7   $       308.8
                    Intersegment sales                               29.0            33.7           115.3            86.3
                                                            --------------  --------------  --------------  --------------
                                                                    135.7           142.0           443.0           395.1
                                                            --------------  --------------  --------------  --------------
               Primary Aluminum:
                    Net sales to unaffiliated customers             153.6           113.5           411.3           303.1
                    Intersegment sales                               56.5            65.7           196.1           177.9
                                                            --------------  --------------  --------------  --------------
                                                                    210.1           179.2           607.4           481.0
                                                            --------------  --------------  --------------  --------------
               Flat-Rolled Products                                 115.4           140.8           390.5           444.4
               Engineered Products                                  134.3           134.5           438.8           405.8
               Minority interests                                    27.1            23.2            77.0            62.6
               Eliminations                                         (85.5)          (99.4)         (311.4)         (264.2)
                                                            --------------  --------------  --------------  --------------
                                                            $       537.1   $       520.3   $     1,645.3   $     1,524.7
                                                            ==============  ==============  ==============  ==============
          Operating income (loss): (4) (5)
               Bauxite and Alumina (2)                      $         6.3   $         4.9   $        36.2   $        (6.4)
               Primary Aluminum (3)                                  21.3            10.0            65.4           (10.5)
               Flat-Rolled Products                                   5.6             5.8            15.9            20.7
               Engineered Products                                    7.3            12.2            33.2            29.8
               Micromill                                               -             (3.2)            (.6)           (9.5)
               Eliminations                                           4.1             1.1             1.2             6.6
               Corporate and Other                                  (14.1)          (18.7)          (43.8)          (50.7)
               Labor Settlement Charge (4)                          (38.5)             -            (38.5)             -
               Other Non-Recurring Operating Items, Net (5)          10.9           (24.1)           22.5           (24.1)
                                                            --------------  --------------  --------------  --------------
                                                            $         2.9   $       (12.0)  $        91.5   $       (44.1)
                                                            ==============  ==============  ==============  ==============
          Depreciation and amortization:
               Bauxite and Alumina (6)                      $         6.1   $         6.0   $        18.1   $        23.8
               Primary Aluminum                                       6.2             6.9            18.6            21.2
               Flat-Rolled Products                                   4.1             4.0            12.3            12.2
               Engineered Products                                    3.0             2.6             8.6             7.9
               Micromill                                               -               .7              .2             2.1
               Corporate and Other                                     .4              .7             1.2             2.2
                                                            --------------  --------------  --------------  --------------
                                                            $        19.8   $        20.9   $        59.0   $        69.4
                                                            ==============  ==============  ==============  ==============

          </TABLE>

          (1)  Net sales for the quarter and nine-month periods ended
          September 30, 2000, included approximately 50,000 tons and
          195,000 tons, respectively, of alumina purchased from third
          parties and resold to certain unaffiliated customers of the
          Gramercy facility and 54,000 tons of alumina purchased from
          third parties for the nine-month period ended September 30,
          2000, and transferred to the Company's Primary aluminum
          business unit.  There were no purchases of alumina from
          third parties during the third quarter of 2000 for the
          Company's Primary aluminum business unit.  Net sales for
          both the quarter and nine-month periods ended September 30,
          1999, included approximately 190,000 tons of alumina
          purchased from third parties and resold to certain
          unaffiliated customers and 60,000 tons of alumina purchased
          from third parties and transferred to the Company's Primary
          aluminum business unit.
          (2)  Operating income (loss) for the quarter and nine-month
          periods ended September 30, 2000, included estimated
          business interruption insurance recoveries totaling $23.8
          and $89.6, respectively.  Operating income (loss) for both
          the quarter and nine-month periods ended September 30, 1999,
          included estimated business interruption insurance
          recoveries totaling $22.0.
          (3)  Operating income (loss) for the quarter and nine-month
          periods ended September 30, 1999, included potline restart
          costs of $1.9 and $11.5, respectively.
          (4)  The allocation of the labor settlement charge to the
          Company's business units is as follows: Bauxite and Alumina
          - $2.1, Primary aluminum - $15.9, Flat-rolled products -
          $18.2 and Engineered products - $2.3.
          (5)  See Note 8 of Notes to Interim Consolidated Financial
          Statements for a  summary of the components of non-recurring
          operating items, net (other than the labor settlement
          charges) and the business segment to which the items relate.
          (6)  Depreciation was suspended for the Gramercy facility for the
          last six months of 1999 and the first nine months of 2000,
          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.  See Note 2 of Notes
          to Interim Consolidated Financial Statements for additional
          information.

               Excluding the capital expenditures made during the first
          nine months of 2000 related to the rebuilding of the Gramercy
          facility, which affected the Bauxite and Alumina segment, and the
          purchase of the capital assets of a drawn tube aluminum
          fabricating operation, which affected the Engineering Products
          segment, there were no material changes in segment assets since
          December 31, 1999.

          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, new
          or modified statutory or regulatory requirements, and changing
          prices and market conditions.  This section and Part I, Item 1.
          "Business - Factors Affecting Future Performance" in the
          Company's Annual Report on Form 10-K for the year ended December
          31, 1999, each identify other factors that could cause actual
          results to vary. 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
               In July 1999, the Company's Gramercy, Louisiana alumina
          refinery was extensively damaged by an explosion in the digestion
          area of the plant.  See Note 2 of Notes to Interim Consolidated
          Financial Statements for a full discussion regarding the incident
          at the Gramercy facility.

               Construction on the damaged part of the facility began
          during the first quarter of 2000.  Initial production at the
          plant is currently expected to commence during the middle of the
          fourth quarter of 2000.  Based on current estimates, full
          production is expected to be achieved during the first quarter of
          2001.  The Company has received the regulatory permits required
          to operate the plant once the facility is ready to resume
          production.

               In March 2000, the U.S. Mine Safety and Health
          Administration ("MSHA") proposed that the Company be assessed a
          penalty of $.5 million in connection with the citations issued
          from its investigation of the incident.  The Company disagrees
          with the substance of the previously issued MSHA citations and
          has challenged them and the associated penalty. However, it is
          possible that other civil or criminal fines or penalties could be
          levied against the Company.

               From the date of the Gramercy incident through September 30,
          2000, the Company had expended or incurred costs or losses
          associated with the Gramercy incident (that were not capital
          expenditures) totaling $155.6 million, consisting of clean-up,
          site preparation and business interruption costs.  From the date
          of the Gramercy incident through September 30, 2000, $134.0
          million of insurance recoveries related to these costs had been
          received.  In addition, during the second and third quarters of
          2000, the Company spent approximately $150.0 million on Gramercy-
          related construction activities and received $73.0 million of
          insurance recoveries for capital expenditures related to the
          rebuilding of the Gramercy facility.  Gramercy-related capital
          spending prior to the second quarter of 2000 was not significant.

          LABOR DISPUTE, SETTLEMENT AND RELATED COSTS
               As previously reported, prior to the settlement of the labor
          dispute, the Company was operating five of its U.S. facilities
          with salaried employees and other employees as a result of the
          September 30, 1998, strike by the United Steelworkers of America
          ("USWA") and the subsequent "lockout" by the Company in January
          1999.  The labor dispute was settled in September 2000.  A
          significant portion of the issues were settled through direct
          negotiations between the Company and the USWA and the remaining
          issues were settled pursuant to an agreed-upon arbitration
          process.  Under the terms of the settlement, USWA members
          generally returned to the affected plants during October 2000.
          The new labor contact, which expires in September 2005, provides
          for a 2.6% average annual increase in the overall wage and
          benefit packages, results in the reduction of at least 540 hourly
          jobs at the five facilities (from approximately 2,800 on
          September 30, 1998), allows the Company greater flexibility in
          using outside contractors and provides for productivity gains by
          allowing the Company to utilize the knowledge obtained during the
          labor dispute without many of the work-rule restrictions that
          were part of the previous labor contract.  The Company has
          recorded a one-time pre-tax labor settlement charge of $38.5
          million in its results for the quarter ended September 30, 2000,
          to reflect the incremental, non-recurring impacts of the labor
          settlement, including severance and other contractual obligations
          for non-returning workers.  See Note 1 of Notes to Interim
          Consolidated Financial Statements for additional discussions on
          the labor settlement.

               As more fully discussed in Note 4 of Notes to Interim
          Consolidated Financial Statements, in connection with the strike
          and subsequent lock-out, certain allegations of unfair labor
          practices ("ULPs") were filed with the National Labor Relations
          Board ("NLRB") by the USWA.  Twenty-two of the twenty-four
          allegations brought by the USWA have been dismissed.  A trial
          date has been set for November 2000 for the remaining two
          allegations.  Any outcome from the trial before the
          administrative law judge would be subject to an additional appeal
          by the general counsel of the NLRB, the USWA or the Company.
          This process could take months or years.  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.  The Company
          continues to believe that the charges are without merit.  While
          uncertainties are inherent in matters such as this and it is
          presently impossible to determine the actual costs, if any, that
          may ultimately arise in connection with this matter, the Company
          does not believe that the ultimate outcome of this matter will
          have a material adverse impact on the Company's liquidity or
          financial position.  However, amounts paid, if any, in
          satisfaction of this matter could be significant to the results
          of the period in which they are recorded.

          WASHINGTON SMELTERS' POWER SALES AND OPERATING LEVEL
               During 2000, as a result of unprecedented high market prices
          for power in the Pacific Northwest, the Company temporarily
          curtailed approximately 128,000 tons of its annual primary
          aluminum production at the Tacoma and Mead, Washington, smelters
          and sold certain power that it had under contract through
          September 30, 2001.  To implement the curtailment, the Company
          temporarily curtailed the two and one-half operating potlines at
          its Tacoma smelter and two and one-half out of a total of eight
          potlines at its Mead smelter.  One-half of a potline at the
          Tacoma smelter was already curtailed.  The Company is currently
          operating the Mead and Tacoma smelters at approximately 50% of
          their capacity.

               During October 2000, the Company signed a new power contract
          with the Bonneville Power Administration ("BPA") under which the
          BPA will provide the Company's operations in the State of
          Washington with power during the period October 2001 through
          September 2006.  The contract will provide the Company with
          sufficient power to fully operate the Company's Trentwood
          facility as well as approximately 40% of capacity at the
          Company's Mead and Tacoma aluminum smelting operations.  Power
          costs under the new contract will exceed the cost of power under
          the Company's current BPA contract by approximately 20%.
          Additional provisions of the new BPA contract include a take-or-
          pay requirement, an additional cost recovery mechanism under
          which the Company's base power rate could be increased and a
          "good corporate citizen" clause, under which the Company's power
          allocation could be curtailed in certain instances.  The Company
          has the right to terminate the contract until certain pricing and
          other provisions of the BPA contract are finalized, which is
          expected to be mid-2001.

               See Note 7 of Notes to Interim Consolidated Financial
          Statements for additional information on the power sales and BPA
          contract.

          STRATEGIC INITIATIVES
               The Company's strategy is to improve its financial results
          by: increasing the competitiveness of its existing plants;
          continuing its cost reduction initiatives; adding assets to
          businesses it expects to grow; pursuing divestitures of its non-
          core businesses; and strengthening its financial position.

               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.  This process has
          continued in 2000.  During the first nine months of 2000, the
          Company sold certain non-operating properties, its Micromill
          assets and technology and its Pleasanton, California, office
          complex and purchased the assets of a drawn tube aluminum
          fabricating operation.  The dispositions were part of the
          Company's initiative to monetize non-strategic or underperforming
          assets.  The acquisition was part of the Company's continued
          focus on growing its Engineered products operations.

               Another area of emphasis has been a continuing focus on
          managing the Company's legacy liabilities.  The Company believes
          that it has insurance coverage available to recover certain
          incurred and future environmental costs and a substantial portion
          of its asbestos-related costs and is actively pursuing recoveries
          in this regard.  For the period from inception through September
          30, 2000, the Company has paid approximately $168.6 million for
          asbestos-related settlements and associated defense costs and has
          received partial insurance reimbursements during this same period
          totaling $105.0 million.  The timing and amount of future
          recoveries of asbestos-related claims from insurance carriers
          remain a major priority of the Company, but will depend on the
          pace of claims review and processing by such carriers and the
          resolution of any disputes regarding coverage under the insurance
          policies.

               Additional portfolio analysis and initiatives are
          continuing.

          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 quarters and nine-month periods ended
          September 30, 2000 and 1999.  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 13 of Notes to Consolidated Financial Statements for the
          year ended December 31, 1999, for further information regarding
          segments.

               Interim results are not necessarily indicative of those for
          a full year.  Average realized prices for the Company's Flat-
          rolled products and Engineered products segments are not
          presented in the following table as such prices are subject to
          fluctuations due to changes in product mix.  Average realized
          third party sales prices for alumina and aluminum in the
          following table includes the impact of hedging activities.

                    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,
                                                            ------------------------------  ------------------------------
                                                                      2000            1999            2000            1999
          --------------------------------------------------------------------------------  ------------------------------
          <S>                                               <C>             <C>             <C>             <C>
          Shipments: (000 tons)
               Alumina (1)
                    Third Party                                     484.0           572.4         1,460.4         1,670.8
                    Intersegment                                    149.8           191.4           584.1           531.0
                                                            --------------  --------------  --------------  --------------
                         Total Alumina                              633.8           763.8         2,044.5         2,201.8
                                                            --------------  --------------  --------------  --------------
               Primary Aluminum
                    Third Party                                      96.3            75.4           261.8           207.3
                    Intersegment                                     34.0            44.6           119.4           130.4
                                                            --------------  --------------  --------------  --------------
                         Total Primary Aluminum                     130.3           120.0           381.2           337.7
                                                            --------------  --------------  --------------  --------------
               Flat-Rolled Products                                  34.9            54.3           125.7           165.8
                                                            --------------  --------------  --------------  --------------
               Engineered Products                                   40.3            42.9           132.3           127.8
                                                            --------------  --------------  --------------  --------------
          Average Realized Third Party Sales Price:
               Alumina (per ton)                            $         204   $         177   $         204   $         173
               Primary Aluminum (per pound)                 $         .72   $         .68   $         .71   $         .66
          Net Sales:
               Bauxite and Alumina (1)
                    Third Party (includes net sales of
                         bauxite)                           $       106.7   $       108.3   $       327.7   $       308.8
                    Intersegment                                     29.0            33.7           115.3            86.3
                                                            --------------  --------------  --------------  --------------
                         Total Bauxite & Alumina                    135.7           142.0           443.0           395.1
                                                            --------------  --------------  --------------  --------------
               Primary Aluminum
                    Third Party                                     153.6           113.5           411.3           303.1
                    Intersegment                                     56.5            65.7           196.1           177.9
                                                            --------------  --------------  --------------  --------------
                         Total Primary Aluminum                     210.1           179.2           607.4           481.0
                                                            --------------  --------------  --------------  -------------
               Flat-Rolled Products                                 115.4           140.8           390.5           444.4
               Engineered Products                                  134.3           134.5           438.8           405.8
               Minority Interests                                    27.1            23.2            77.0            62.6
               Eliminations                                         (85.5)          (99.4)         (311.4)         (264.2)
                                                            --------------  --------------  -------------   --------------
                         Total Net Sales                    $       537.1   $       520.3   $     1,645.3   $     1,524.7
                                                            ==============  ==============  ==============  ==============
          Operating Income (Loss): (4) (5)
               Bauxite & Alumina (2)                        $         6.3   $         4.9   $        36.2   $        (6.4)
               Primary Aluminum (3)                                  21.3            10.0            65.4           (10.5)
               Flat-Rolled Products                                   5.6             5.8            15.9            20.7
               Engineered Products                                    7.3            12.2            33.2            29.8
               Micromill                                               -             (3.2)            (.6)           (9.5)
               Eliminations                                           4.1             1.1             1.2             6.6
               Corporate                                            (14.1)          (18.7)          (43.8)          (50.7)
               Labor Settlement Charge (4)                          (38.5)            -             (38.5)             -
               Other Non-Recurring Operating Items, Net (5)          10.9           (24.1)           22.5           (24.1)
                                                            --------------  --------------  --------------  --------------
                         Total Operating Income (Loss)      $         2.9   $       (12.0)  $        91.5   $       (44.1)
                                                            ==============  ==============  ==============  ==============
          Net Income (Loss)                                 $       (16.7)  $       (38.8)  $         6.5   $       (91.8)
                                                            ==============  ==============  ==============  ==============
          Capital Expenditures                              $       110.7   $        10.0   $       196.5   $        40.3
                                                            ==============  ==============  ==============  ==============

          </TABLE>

          (1)  Net sales for the quarter and nine-month periods ended
          September 30, 2000, included approximately 50,000 tons and
          195,000 tons, respectively, of alumina purchased from third
          parties and resold to certain unaffiliated customers and
          54,000 tons of alumina purchased from third parties for the
          nine-month period ended September 30, 2000, and transferred
          to the Company's Primary aluminum business unit.  There were
          no purchases of alumina from third parties during the third
          quarter of 2000 for the Company's Primary aluminum business
          unit.  Net sales for both the quarter and nine-month periods
          ended September 30, 1999, included approximately 190,000
          tons of alumina purchased from third parties and resold to
          certain unaffiliated customers and 60,000 tons of alumina
          purchased from third parties and transferred to the
          Company's Primary aluminum business unit.
          (2)  Operating income (loss) for the quarter and nine-month
          periods ended September 30, 2000, included estimated
          business interruption insurance recoveries totaling $23.8
          and $89.6, respectively.  Operating income (loss) for both
          the quarter and nine-month periods ended September 30, 1999,
          included estimated business interruption insurance
          recoveries totaling $22.0.  Additionally, depreciation was
          suspended for the Gramercy facility, 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.  See Note 2 of Notes to Interim
          Consolidated Financial Statements for additional
          information.
          (3)  Operating income (loss) for the quarter and nine-month
          periods ended September 30, 1999, included potline restart
          costs of $1.9 and $11.5, respectively.
          (4)  The allocation of the labor settlement charges to the
          Company's business units is as follows: Bauxite and Alumina
          - $2.1, Primary aluminum - $15.9, Flat-rolled products -
          $18.2 and Engineered products - $2.3.
          (5)  See Note 8 of Notes to Interim Consolidated Financial
          Statements for a detail summary of the components of non-
          recurring operating items, net (other than the labor settlement
          charges) and the business segment to which the
          items are applicable.

          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 5
          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 1999, the Average Midwest United States transaction
          price ("AMT price") per pound of primary aluminum declined from
          the low $.60 range at the beginning of the year to a low of
          approximately $.57 per pound in February and then began a steady
          increase ending 1999 at $.79 per pound.  During both the quarter
          and nine-month periods ended September 30, 2000, the average AMT
          price was $.76 per pound.  The average AMT price for primary
          aluminum for the week ended October 27, 2000, was approximately
          $.71 per pound.

          QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2000, COMPARED TO
          QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1999

          SUMMARY
               The Company reported a net loss of $16.7 million for the
          third quarter of 2000 compared to a net loss of $38.8 million for
          the same period of 1999.  For the nine-month period ended
          September 30, 2000, the Company reported net income of $6.5
          million compared to a net loss of $91.8 million for the nine-
          month period ended September 30, 1999.

               Results for the quarter and nine-month periods ended
          September 30, 2000 and 1999 included several special items.  See
          Note 1 of Notes to Interim Consolidated Financial Statements for
          a discussion of the labor settlement charge and Note 8 of Notes
          to Interim Financial Statements for discussions of the other
          gains and losses.

               Net sales in the third quarter of 2000 totaled $537.1
          million compared to $520.3 million in the third quarter of 1999.
          Net sales for the nine-month period ended September 30, 2000,
          totaled $1,645.3 million compared to $1,524.7 million for the
          nine-month period ended September 30, 1999.

          BAUXITE AND ALUMINA
               Third party net sales of alumina were slightly lower for the
          quarter ended September 30, 2000, as compared to the same period
          in 1999 as a 14% increase in third party average realized prices
          was more than offset by a 15% decrease in third party shipments.
          The increase in average realized prices was due to an increase in
          primary aluminum market prices because the sales price for
          alumina under the Company's third-party alumina sales contracts
          are linked to primary aluminum prices.  This increase was
          partially offset by allocated net losses from the Company's
          hedging activities.  The decrease in quarter-over-quarter
          shipments resulted primarily from differences in the timing of
          shipments and, to a lesser extent, the net effect of the Gramercy
          incident, after considering the 50,000 tons of alumina purchased
          by the Company in 2000 from third parties to fulfill third party
          sales contracts.

               Intersegment net sales of alumina for the quarter ended
          September 30, 2000, decreased 14% as compared to the same period
          in 1999.  A 22% decrease in intersegment shipments was partially
          offset by a 9% increase in the intersegment average realized
          price.  The decrease in shipments was primarily due to the
          potline curtailments at the Company's Washington smelters in mid-
          June 2000, as discussed above, and, to lessor extent, the timing
          of shipments.  The increase in the intersegment average realized
          price is the result of increases in primary aluminum prices from
          period to period as intersegment transfers are made on the basis
          of primary aluminum market prices on a lagged basis of one month.
          No alumina was purchased from third parties in the third quarter
          of 2000 for the Primary aluminum business unit as the June 2000
          potline curtailments alleviated the need for such purchases.

               For the nine-month period ended September 30, 2000, third
          party net sales of alumina were 6% higher than the comparable
          period in 1999 as an 18% increase in third party average realized
          prices was partially offset by a 13% decrease in third party
          shipments.  The increase in average realized prices and decrease
          in third party shipments during the first nine months of 2000 as
          compared to 1999 was attributable to the same price and volume
          factors discussed above.  Third party net sales included
          approximately 195,000 tons of alumina purchased by the Company
          from third parties to fulfill third party sales contracts.

               Intersegment net sales for the nine-month period ended
          September 30, 2000, increased 34% as compared to the same period
          in 1999.  The increase was due to a 21% increase in the
          intersegment average realized price and a 10% increase in
          intersegment shipments.  The increase in the intersegment average
          realized price is the result of increases in primary aluminum
          prices from period to period as intersegment transfers are made
          on the basis of primary aluminum market prices on a lagged basis
          of one month.  The increase in shipments was due to the favorable
          impact of operating more potlines at the Company's smelters
          during the first half of 2000 as compared to the same period in
          1999 offset, in part, by the unfavorable impact of the potline
          curtailments at the Company's Washington smelters in mid-June
          2000 discussed above.  Intersegment net sales for the year to
          date 2000 period included approximately 54,000 tons of alumina
          purchased during the first six months of 2000 from third-parties
          and transferred to the Primary aluminum business unit.

               Segment operating income (before non-recurring items) for
          the quarter ended September 30, 2000, was essentially flat as
          compared to the comparable period in 1999 as the increase in the
          average realized sales prices was offset by energy price
          increases as well as decreases in shipments.  Segment operating
          income (before non-recurring items) for the nine-month period
          ended September 30, 2000, increased from the comparable period in
          1999 primarily as the result of the increase in the average
          realized sales prices which was offset in part by the net
          decrease in shipments as discussed above.

               Segment operating income for the quarter and nine-month
          periods ended September 30, 2000, discussed above, excludes non-
          recurring labor settlement charges of $2.1 million and
          incremental maintenance spending of $11.5 million.  Segment
          operating income for the quarter and nine-month periods ended
          September 30, 1999, excludes the segment's allocated share of the
          expense of insurance deductibles related to the Gramercy incident
          of $4.0 million.

               See Note 2 of Notes to Interim Consolidated Financial
          Statements for additional discussion of the effect of the
          Gramercy incident on the Bauxite and Alumina business unit's
          operations.

          PRIMARY ALUMINUM
               Third party net sales of primary aluminum were up 35% for
          the third quarter of 2000 as compared to the same period in 1999
          as a result of a 28% increase in third party shipments and a 6%
          increase in third party averaged realized prices.  The increase
          in shipments was primarily due to the timing of shipments and the
          favorable impact of the increased operating rate at the Company's
          90%-owned Volta Aluminium Company Limited ("Valco") offset, only
          modestly, by the mid-June 2000 curtailment of the potlines at the
          Washington smelters discussed above as the business unit
          purchased primary aluminum from third-parties to meet its third-
          party and internal commitments (see additional discussion below.)
          The increase in the average realized prices reflects the 11%
          increase in primary aluminum market prices, partially offset by
          allocated net losses from the Company's hedging activities.
          Intersegment net sales were down approximately 14% between the
          third quarter of 2000 and the third quarter of 1999.  This
          decrease was the result of a 24% decrease in intersegment
          shipments offset, in part, by a 12% increase in intersegment
          average realized prices.  The decrease in shipments was primarily
          due to the potline curtailment at the Washington smelters.  The
          increase in the intersegment average realized price was due to
          higher market prices for primary aluminum as intersegment
          transfers are made on the basis of primary aluminum market
          prices.

               For the nine-month period ended September 30, 2000, third
          party sales of primary aluminum increased approximately 36% from
          the comparable period in 1999, reflecting a 26% increase in third
          party shipments and an 8% increase in third party average
          realized prices.  The increases in year-to-date 2000 shipments
          and prices compared to 1999 were attributable to the same factors
          described above.  Intersegment net sales for the nine-month
          period ended September 30, 2000 were up 10% as compared to the
          same period in 1999.  This increase primarily resulted from a 19%
          increase in intersegment average realized prices, reflecting
          higher market prices for primary aluminum offset, in part, by a
          8% decrease in intersegment shipments, which was primarily due to
          the potline curtailments at the Washington smelters.

               Segment operating income (before non-recurring items) for
          the quarter and nine-month periods ended September 30, 2000, was
          up from the comparable periods in 1999.  The primary reason for
          the increases was the improvements in average realized prices and
          net shipments discussed above.  However, segment operating income
          for the quarter and nine-month periods ended September 30, 2000,
          have been adversely affected by increases in alumina and electric
          power costs.  Even after excluding the excess power costs
          experienced by the Company in the Pacific Northwest, power costs
          have generally increased.  As previously reported, new agreements
          entered into in both Ghana and Wales provide for increased power
          stability but at increased costs.  Additionally, the quarter and
          nine-month periods ended September 30, 1999, also included costs
          of approximately $1.9 million and $11.5 million, respectively,
          associated with preparing and restarting potlines at Valco and
          the Washington smelters.

               Third party and intersegment shipments for the quarter and
          nine-month periods ended September 30, 2000, also include
          approximately 26,000 tons of primary aluminum purchased from
          third parties to meet the business unit's internal and third
          party shipment commitments because production was insufficient to
          meet such needs as a result of the aforementioned potline
          curtailments.  Such volumes were sold by the business unit at
          cost.  However this had an adverse impact on its operating
          income, as compared to having produced such primary aluminum in
          prior quarters.

               Segment operating income for the quarter and nine-month
          periods ended September 30, 2000, discussed above, excludes non-
          recurring net power sales gains of $40.5 million and $56.3
          million, respectively.  Segment operating income for the quarter
          and nine-month period ended September 30, 2000, also exclude the
          segment's share of the non-recurring labor settlement charge of
          $15.9 million and costs related to staff reduction initiatives of
          $3.1 million.

          FLAT-ROLLED PRODUCTS
               Net sales of flat-rolled products decreased by 18% during
          the third quarter 2000 as compared to 1999 as a 36% decrease in
          shipments was partially offset by a 27% increase in average
          realized prices.  The decrease in shipments was primarily due to
          reduced shipments of can body stock as a part of the Company's
          planned exit from this product line. Offsetting the reduced can
          body stock shipments was a modest quarter over quarter
          improvement in shipments of heat-treat products.  The increase in
          average realized prices primarily reflects the change in product
          mix (resulting from the can body stock exit) as well as the pass
          through to customers of increased market prices for primary
          aluminum.

               For the nine-month period ended September 30, 2000, net
          sales of flat-rolled products decreased by 12% as compared to the
          same period in 1999 as a 24% decrease in shipments was partially
          offset by a 16% increase in average realized prices.  The decline
          in year-to-date 2000 shipments is primarily attributable to the
          aforementioned decline in can body stock offset, in part, by
          increased shipments of general engineering heat-treat products.
          The increase in the average realized price reflects the pass-
          through to customers of increased market prices for primary
          aluminum offset, in part, by a decline in prices for aerospace
          heat-treat products subsequent to the first quarter of 1999 due
          to reduced demand.

               Segment operating income (before non-recurring items) for
          the quarter ended September 30, 2000, was essentially flat when
          compared to the comparable period in 1999 as the increase in
          heat-treat products was offset by the can body stock exit.  The
          decrease in segment operating income (before non-recurring items)
          in the nine-month period ended September 30, 2000, compared to
          the comparable period in 1999 was attributable to the same
          factors described above.

               Segment operating income for the quarter and nine-month
          periods ended September 30, 2000, discussed above, excludes the
          segment's share of the non-recurring labor settlement charge of
          $18.2 million.  Segment operating income also excludes a $7.5
          million LIFO inventory charge and $1.5 million of impairment
          charges associated with the Company's exit from the can body
          stock product line.

               Results for the fourth quarter of 2000 for the flat-rolled
          products segment may be modestly adversely affected by a routine
          maintenance outage of certain equipment, which could cause heat-
          treat product shipments to be less than they would be otherwise.

          ENGINEERED PRODUCTS
               Net sales of engineered products were essentially flat for
          the third quarter 2000 as compared to 1999, as a 6% increase in
          average realized prices was offset by a 6% decrease in product
          shipments.  The increase in average realized prices reflects
          increased prices for soft alloy extrusions offset, in part, by a
          shift in product mix.  The decrease in product shipments was the
          result of reduced ground transportation shipments due to
          softening market demand.

               For the nine-month period ended September 30, 2000, net
          sales of engineered products increased approximately 8% as
          compared to the same period in 1999 as the result of a 3%
          increase in product shipments and a 5% increase in average
          realized prices.  The increase in product shipments in 2000 over
          1999 reflects a strong first half of 2000 offset by a weakening
          ground transportation market in the third quarter of 2000.  In
          addition to the factors described above, the changes in average
          realized prices for the nine-month period ended September 30,
          2000, also reflect the pass through to customers of increased
          market prices for primary aluminum.

               The changes in segment operating income (before non-
          recurring items) for the quarter and nine-months periods ended
          September 30, 2000, as compared to the comparable periods in 1999
          were attributable to the same factors described above.

               Segment operating income for the quarter ended September 30,
          2000, discussed above, excludes a non-recurring impairment charge
          associated with product line exit of $4.0 million and labor
          settlement charges of $2.3 million.  In addition to these items,
          segment operating results for the nine-month period ended
          September 30, 2000, excluded a $.7 severance-related charge
          (reflected in the second quarter of 2000) with respect to the
          same product line exit.

               Segment operating income for the nine months ended September
          30, 1999, included equity in earnings of $2.5 million from the
          Company's 50% interest in AKW L.P., which was sold in April 1999.

          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 (excluding non-recurring items)
          represent corporate general and administrative expenses which are
          not allocated to the Company's business segments.

               Corporate operating results for the quarter and nine-month
          periods ended September 30, 2000, exclude costs related to staff
          reduction and efficiency initiatives of $2.0 million and $5.5
          million, respectively.   Corporate operating results for the
          quarter and nine-month periods ended September 30, 1999, exclude
          the expense of insurance deductibles related to the Gramercy
          incident allocated to the Corporate segment of $1.0 million.
          Corporate operating results for the third quarter of 1999 also
          included an approximate $3.0 million non-cash re-allocation of
          certain employee benefit costs between the Corporate and other
          business units.

          LIQUIDITY AND CAPITAL RESOURCES
               See Note 5 of Notes to Consolidated Financial Statements for
          the year ended December 31, 1999, for a listing of the Company's
          indebtedness and information concerning certain restrictive debt
          covenants.

          OPERATING ACTIVITIES
               At September 30, 2000, the Company had working capital of
          $305.8 million, compared with working capital of $341.9 million
          at December 31, 1999.  The decrease in working capital primarily
          resulted from decreases in inventories, prepaid expenses and
          other current assets and increases in accounts payable and
          accrued salaries, wages and related expenses offset by an
          increase in trade and other receivables.  The decrease in
          inventories reflects a planned focus on inventory reduction and
          efficiency initiatives and the previously announced exit from
          production of can body stock at the Flat-rolled products business
          unit.  The decrease in prepaid expenses and other current assets
          was driven by a reduction in margin deposits associated with the
          Company's hedging positions.  The increase in accounts payable
          was primarily due to increased capital spending related to the
          Gramercy incident.  The increase in accrued salaries, wages and
          related expenses were primarily due to the labor settlement with
          the USWA (see Note 1 of Notes to Interim Financial Statements).
          The increase in trade receivables reflects the increased market
          prices for primary aluminum.  The increase in other receivables
          was primarily due to an increase in the estimated business
          interruption insurance recoveries related to the Gramercy
          facility incident (see Note 2 of Notes to Interim Consolidated
          Financial Statements).  Changes in trade receivables and
          inventories also reflect the factors described in "Results of
          Operations."

          INVESTING ACTIVITIES
               Capital expenditures during the nine-month period ended
          September 30, 2000, were $196.5 million, consisting primarily of
          $159.0 million for the rebuilding of the Gramercy facility and
          $13.3 million for the purchase of the non-working capital assets
          of a drawn tube aluminum fabricating operation (see Note 6 of
          Notes to Interim Consolidated Financial Statements).  The
          remainder of the 2000 capital expenditures were incurred to
          improve production efficiency and reduce operating costs at the
          Company's other facilities.  Total consolidated capital
          expenditures, excluding the capital expenditures for the
          rebuilding of the Gramercy facility (see Note 2 of Notes to
          Interim Consolidated Financial Statements), are expected to be
          between $80.0 and $115.0 million per annum in each of 2000
          through 2002 (of which approximately 10% is expected to be funded
          by the Company's minority partners in certain foreign joint
          ventures).  See "- Financing Activities and Liquidity" below for
          a discussion of Gramercy-related capital spending.  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

          SHORT-TERM:
               In addition to normal operating items, the Company's near-
          term liquidity will be, as more fully discussed below, affected
          by the Gramercy incident and the amount of net payments for
          asbestos liabilities.

               The Company will continue to incur substantial business
          interruption costs and capital spending until all construction
          activity at the Gramercy facility is completed and full
          production is restored.  Business interruption costs are expected
          to be substantially offset by insurance recoveries.  A minimum of
          an additional $27.0 million of capital spending is expected to be
          funded by insurance recoveries.  The remainder of the Gramercy-
          related capital expenditures will be funded by the Company using
          existing cash resources, funds from operations and/or borrowings
          under the Company's Credit Agreement.  The amount of capital
          expenditures to be funded by the Company will depend on, among
          other things, the ultimate cost, the elapsed time of the rebuild,
          and negotiations with the insurance carriers.  The Company had
          previously estimated that the cost of the Gramercy rebuild would
          be approximately $200.0 million and that at least 50% would be
          funded by insurance recoveries.  The Company now believes that
          the total cost of the rebuild will be somewhat higher than
          previously estimated.  The Company continues to believe that at
          least 50% of the total cost will be funded by insurance
          recoveries.  However, the Company has not yet reflected an
          increase in the minimum expected property damage recovery amount
          pending further discussions with the Company's insurers.

               The Company continues to work with the insurance carriers to
          maximize the amount of recoveries and to minimize, to the extent
          possible, the period of time between when the Company expends
          funds and when it is reimbursed.  The Company will likely have to
          continue to fund an average of 30 - 60 days of property damage
          and business interruption activity, unless some other arrangement
          is agreed with the insurance carriers, and such amounts will be
          significant.  The Company believes it has sufficient financial
          resources to fund the remaining construction and business
          interruption costs on an interim basis.  However, no assurances
          can be given in this regard.

               During the first nine months of 2000, the Company paid $47.7
          million of asbestos-related settlement and defense costs and
          received insurance reimbursements of $36.5 million for asbestos-
          related matters.  The Company's future cash payments, prior to
          insurance recoveries, for asbestos-related costs is estimated to
          be approximately $60.0 million in the fourth quarter of 2000 and
          to be between $100.0 million and $125.0 million in each of the
          years 2001 and 2002.  The Company believes that it will recover a
          substantial portion of asbestos payments from insurance.
          However, insurance reimbursements have historically lagged the
          Company's payments.  Delays in receiving future insurance
          repayments would have an adverse impact on the Company's
          liquidity.

               While no assurance can be given that existing cash sources
          will be sufficient to meet the Company's short-term liquidity
          requirements, management believes that the Company's existing
          cash resources, together with cash flows from operations and
          borrowings under the credit agreement, as amended (the "Credit
          Agreement") - (which the Company intends to extend or replace
          prior to its August 2001 expiration date), will be sufficient to
          satisfy its working capital and capital expenditure requirements
          for the next year.

          LONG-TERM:
               As of September 30, 2000, the Company's total consolidated
          indebtedness was $959.3 million, compared with $972.8 million at
          December 31, 1999.

               At September 30, 2000, $235.6 million (of which $64.7
          million could have been used for letters of credit) was available
          to the Company under the Credit Agreement and no borrowings were
          outstanding.  As of October 31, 2000, $16.2 million of borrowings
          were outstanding under the Credit Agreement.  During the first
          nine months of 2000, amounts outstanding at the end of a month
          have been as high as approximately $53.4 million, which occurred
          in August 2000 primarily as a result of costs incurred and
          capital spending related to the Gramercy rebuild, net of
          insurance reimbursements.  The average amount of borrowings
          outstanding under the Credit Agreement during the nine-month
          period ended September 30, 2000, was approximately $28.0 million.
          The average per annum interest rate on loans outstanding under
          the Credit Agreement during the nine-month period ended September
          30, 2000, was approximately 10.2%.  The Credit Agreement
          significantly restricts the Company's ability to pay any
          dividends on its common stock.

               The Credit Agreement expires in August 2001.  It is the
          Company's intent to extend or replace the Credit Agreement prior
          to its expiration.  However, in order for the Credit Agreement to
          be extended beyond January 2002, it is likely that the $225.0
          million of 9-7/8% Senior Notes, due February 2002, (the "9-7/8%
          Senior Notes"), will have to be retired or that both the 9-7/8%
          Senior Notes and the $400.0 million of 12-3/4% Senior
          Subordinated Notes, due February 2003, will have to be
          simultaneously retired and/or refinanced.

               The Company's ability to make payments on and to refinance
          its debt on a long-term basis 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.  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,
          financing and capital expenditure requirements.

          ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                    -----------------------------------------------------
                    RISK
                    ----

               The information included under Item 3. "QUANTITATIVE AND
          QUALITATIVE DISCLOSURES ABOUT MARKET RISK" in the Company's Form
          10-Q for the quarterly period ended March 31, 2000, is
          incorporated by reference.

                             PART II - OTHER INFORMATION

          ITEM 1.   LEGAL PROCEEDINGS
                    -----------------

          Gramercy Litigation

               On July 5, 1999, the Company's Gramercy, Louisiana, alumina
          refinery was extensively damaged by an explosion in the digestion
          area of the plant.  The cause of the accident is under
          investigation by the Company and various governmental agencies.
          The U.S. Mine Safety and Health Administration issued 24
          citations and proposed the Company be assessed a penalty of $.5
          million in connection with its investigation of the Gramercy
          incident.  The citations allege, among other things, that certain
          aspects of the plant's operations were unsafe and that such mode
          of operation contributed to the explosion.  The Company has
          previously announced that it disagrees with the substance of the
          citations and has challenged them and the associated penalty.  It
          is possible that other civil or criminal fines or penalties could
          be levied against the Company.

               A number of employees were injured in the incident, several
          of them severely.  The Company may be liable for claims relating
          to the injured employees.  The incident has resulted in more than
          ninety lawsuits, many of which were styled as class action suits,
          being filed against the Company and others since July 1999 on
          behalf of more than 16,000 claimants.  Such lawsuits allege,
          among other things, property damage, business interruption loss
          by other businesses and personal injury.  Such lawsuits generally
          are pending in the Fortieth Judicial District Court for the
          Parish of St. John the Baptist, State of Louisiana, and in the
          Twenty-Third Judicial District Court for the Parish of St. James
          or the Parish of Ascension, State of Louisiana, although a few of
          the lawsuits are pending in the United States District Court,
          Eastern District of Louisiana, or in the United States Court of
          Appeals for the Fifth Circuit.  Discovery has begun in the cases.
          The aggregate amount of damages sought in the lawsuits cannot be
          determined at this time.

               In connection with the incident at Gramercy, the Company
          entered into a Consent Agreement and Final Order with the U.S.
          Environmental Protection Agency in July 2000 pursuant to which
          the Company agreed to pay a penalty of $200,000 and to implement
          an Operational Management System.

               See Part I, Item 3.  "LEGAL PROCEEDINGS - Gramercy
          Litigation" in the Company's Form 10-K for the year ended
          December 31, 1999, and Part II, Item 1. "LEGAL PROCEEDINGS -
          Gramercy Litigation" in the Company's Form 10-Q for the quarter
          ended June 30, 2000.

          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 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, 1999.

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

               (a)  Exhibits.

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

               *4.1      Agreement dated August 18, 2000, among the Company,
                         Kaiser Aluminum Corporation ("KAC"), the financial
                         institutions party to the Credit Agreement dated as of
                         February 15, 1994, as amended,  and Bank of America,
                         N.A., as agent, regarding the Sale of the Center for
                         Technology.

               *10.1     Stock Option Grant Pursuant to the Kaiser 1997
                         Omnibus Stock Incentive Plan to Jack A. Hockema.

               *10.2     Restricted Stock Agreement between Raymond J.
                         Milchovich, the Company and KAC pursuant to the
                         Kaiser 1997 Omnibus Stock Incentive Plan.

               *10.3     Form of Enhanced Severance Agreement between the
                         Company and key executive personnel.

               *10.4     Time-Based Stock Option Grant Pursuant to the
                         Kaiser 1997 Omnibus Stock Incentive Plan to
                         Raymond J. Milchovich.

               *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, 2000.



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

          *    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)


                                           KAISER ALUMINUM & CHEMICAL
                                           CORPORATION


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




          Dated:    November 9, 2000