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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 JUNE 30, 1999

                            Commission file number 1-3605




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


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


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


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





               Indicate by check mark whether the registrant (1) has filed
          all reports required to be filed by Section 13 or 15(d) of the
          Securities Exchange Act of 1934 during the preceding 12 months
          (or for such shorter period that the registrant was required to
          file such reports), and (2) has been subject to such filing
          requirements for the past 90 days.
          Yes   x        No
             ------         ------

               At August 6, 1999, 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>
                                                                            June 30,    December 31,

                                                                                1999            1998
                                                                      ------------------------------
          <S>                                                         <C>             <C>
                                     ASSETS                             (Unaudited)
          Current assets:
               Cash and cash equivalents                              $        26.2   $        98.3
               Receivables                                                    277.5           288.2
               Inventories                                                    524.7           543.5
               Prepaid expenses and other current assets                      132.1           104.9
                                                                      ------------------------------
                    Total current assets                                      960.5         1,034.9

          Investments in and advances to unconsolidated affiliates            101.2           128.3
          Property, plant, and equipment - net                              1,088.0         1,108.7
          Deferred income taxes                                               404.9           376.9
          Other assets                                                        495.7           346.0
                                                                      ------------------------------

                    Total                                             $     3,050.3   $     2,994.8
                                                                      ==============================

                       LIABILITIES & STOCKHOLDERS' EQUITY
          Current liabilities:
               Accounts payable                                       $       148.1   $       173.3
               Accrued interest                                                37.3            37.3
               Accrued salaries, wages, and related expenses                   62.4            73.8
               Accrued postretirement medical benefit obligation -
                    current portion                                            48.2            48.2
               Other accrued liabilities                                      168.5           150.2
               Payable to affiliates                                           78.5            75.3
               Long-term debt - current portion                                  .4              .4
                                                                      ------------------------------
                    Total current liabilities                                 543.4           558.5

          Long-term liabilities                                               670.2           533.0
          Accrued postretirement medical benefit obligation                   687.5           694.3
          Long-term debt                                                      962.3           962.6
          Minority interests                                                   95.6           101.9
          Redeemable preference stock                                          19.2            20.1
          Commitments and contingencies
          Stockholders' equity:
               Preferred stock                                                  1.5             1.5
               Common stock                                                    15.4            15.4
               Additional capital                                           2,113.0         2,052.8
               Accumulated deficit                                           (204.9)         (151.2)
               Less: Note receivable from parent                           (1,852.9)       (1,794.1)
                                                                      ------------------------------
                    Total stockholders' equity                                 72.1           124.4
                                                                      ------------------------------

                         Total                                        $     3,050.3   $     2,994.8
                                                                      ==============================

          </TABLE>

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



           KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

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

          <TABLE>
          <CAPTION>

                                                                    Quarter Ended                 Six Months Ended
                                                                       June 30,                       June 30,
                                                            -----------------------------  -----------------------------
                                                                      1999           1998            1999           1998
                                                            -----------------------------  -----------------------------
          <S>                                               <C>            <C>             <C>            <C>
          Net sales                                         $       525.0  $       614.8   $     1,004.4  $     1,211.8
                                                            -----------------------------  -----------------------------

          Costs and expenses:
               Cost of products sold                                473.9          503.5           933.8        1,000.6
               Depreciation and amortization                         24.1           24.9            48.5           50.3
               Selling, administrative, research and
                    development, and general                         26.2           31.0            54.2           60.5
                                                            -----------------------------  -----------------------------
                         Total costs and expenses                   524.2          559.4         1,036.5        1,111.4
                                                            -----------------------------  -----------------------------

          Operating income (loss)                                      .8           55.4           (32.1)         100.4

          Other income (expense):
               Interest expense                                     (27.4)         (26.9)          (55.1)         (54.9)
               Other - net                                            1.3           (2.4)            2.6           (1.8)
                                                            -----------------------------  -----------------------------

          Income (loss) before income taxes and minority
               interests                                            (25.3)          26.1           (84.6)          43.7

          Benefit (provision) for income taxes                        8.6           (9.0)           28.8          (15.2)

          Minority interests                                          1.4             .3             2.8            1.3
                                                            -----------------------------  -----------------------------

          Net income (loss)                                 $       (15.3) $        17.4   $       (53.0) $        29.8
                                                            =============================  =============================


          </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>
                                                                             Six Months Ended
                                                                                 June 30,
                                                                      ------------------------------
                                                                                1999            1998
                                                                      ------------------------------
          <S>                                                         <C>             <C>
          Cash flows from operating activities:
               Net income (loss)                                      $       (53.0)  $        29.8
               Adjustments to reconcile net income (loss) to net cash
                    (used) provided by operating activities:
                    Depreciation and amortization (including deferred
                         financing costs of $2.1 and $2.0)                     50.6            52.3
                    Gain on sale of interest in AKW joint venture             (50.5)          -
                    Equity in (income) loss of unconsolidated
                         affiliates, net of distributions                      (4.2)            1.5
                    Minority interests                                         (2.8)           (1.3)
                    Decrease in receivables                                    10.8            45.2
                    Decrease in inventories                                    18.8            61.5
                    (Increase) decrease in prepaid expenses and other
                         current assets                                       (37.4)           11.0
                    Decrease in accounts payable and accrued interest         (25.2)          (19.7)
                    Increase (decrease) in payable to affiliates and
                         other accrued liabilities                              4.3           (31.4)
                    (Decrease) increase in accrued and deferred
                         income taxes                                         (36.5)            5.3
                    Increase (decrease) in net long-term assets and
                         liabilities                                           11.1            (9.8)
                    Other                                                       1.5             7.7
                                                                      ------------------------------

                          Net cash (used) provided by operating
                              activities                                     (112.5)          152.1
                                                                      ------------------------------

          Cash flows from investing activities:
               Proceeds from sale of interest in AKW joint venture             70.4           -
               Capital expenditures                                           (30.3)          (36.7)
               Other                                                             .3            (3.1)
                                                                      ------------------------------
                         Net cash provided (used) by investing
                              activities                                       40.4           (39.8)
                                                                      ------------------------------
          Cash flows from financing activities:
               Borrowings under revolving credit facility, net                 -               -
               Repayments of long-term debt                                     (.4)           (7.0)
               Capital stock issued                                             1.3            -
               Decrease in restricted cash, net                                  .8             1.2
               Dividends paid                                                   (.3)            (.4)
               Redemption of minority interests' preference stock              (1.4)           (8.5)
                                                                      ------------------------------
                         Net cash used by financing activities                 -              (14.7)
                                                                      ------------------------------

          Net (decrease) increase in cash and cash equivalents
               during the period                                              (72.1)           97.6
          Cash and cash equivalents at beginning of period                     98.3            15.8
                                                                      ------------------------------
          Cash and cash equivalents at end of period                  $        26.2   $       113.4
                                                                      ==============================

          Supplemental disclosure of cash flow information:
               Interest paid, net of capitalized interest             $        53.0   $        53.2
               Income taxes paid                                                8.8             7.2
               Tax allocation payments to Kaiser Aluminum Corporation          -                1.7

          </TABLE>

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



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

          1.   GENERAL

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

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

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

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

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

          INCIDENT AT GRAMERCY FACILITY
               On July 5, 1999, the Company's Gramercy, Louisiana alumina
          refinery was extensively damaged by an explosion in the digestion
          area of the plant.  Approximately 24 employees were injured in the
          incident, several of them severely. The cause of the incident is
          under investigation by the Company and governmental agencies.

               As previously announced, the Company expects that production
          at the plant will be curtailed for many months.  The Company has
          declared force majeure with respect to certain of its sales and
          purchase contracts, but continues to work with customers to
          assist them in securing alternative sources of alumina.

               More than 30 lawsuits have been filed against the Company
          alleging, among other things, property damage and personal injury
          as a result of the incident.  In addition, a claim for alleged
          business interruption losses has been made by a neighboring
          business.  The aggregate amount of damages sought in the lawsuits
          and other claims cannot be determined at this time.

               The Company has significant amounts of property damage,
          business interruption, liability and workers compensation
          insurance coverage relating to the Gramercy incident.
          Deductibles and self-retention provisions under  the insurance
          coverage for the Gramercy incident total $5.0.

               The incident will cause the Company to incur incremental
          costs for clean-up and other activities in the second half of
          1999 and will cause the affected operations to incur certain
          operating losses until production can be restored.  Further,
          depending on the outcome of the ongoing investigations by various
          regulatory agencies, the Company could also be subject to certain
          fines or penalties, which may not be covered by insurance.
          However, based on what is known to date, the Company currently
          believes that the financial impact of this incident (in excess of
          the deductibles and self-retention provisions) will be largely
          offset by insurance coverage.

               The accompanying consolidated financial statements as of and
          for the periods ended June 30, 1999, do not include any
          provisions for the Gramercy incident.

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

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

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

          2.   INVENTORIES
               The classification of inventories is as follows:

          <TABLE>
          <CAPTION>

                                                                               June 30,    December 31,
                                                                                   1999            1998
                                                                         ------------------------------
             <S>                                                         <C>             <C>
             Finished fabricated aluminum products                       $        118.2  $        112.4
             Primary aluminum and work in process                                 171.6           205.6
             Bauxite and alumina                                                  118.9           109.5
             Operating supplies and repair and maintenance parts                  116.0           116.0
                                                                         ------------------------------
                  Total                                                  $        524.7  $        543.5
                                                                         ==============================

          </TABLE>

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

          3.   CONTINGENCIES

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

               Based on the Company's evaluation of these and other
          environmental matters, the Company has established environmental
          accruals primarily related to potential solid waste disposal and
          soil and groundwater remediation matters.  At June 30, 1999, the
          balance of such accruals, which are primarily included in Long-
          term liabilities, was $50.1.  These environmental accruals
          represent the Company's estimate of costs reasonably expected to
          be incurred based on presently enacted laws and regulations,
          currently available facts, existing technology, and the Company's
          assessment of the likely remediation actions to be taken.  The
          Company expects that these remediation actions will be taken over
          the next several years and estimates that annual expenditures to
          be charged to these environmental accruals will be approximately
          $3.0 to $8.0 for the years 1999 through 2003 and an aggregate of
          approximately $30.0 thereafter.

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

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

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

          ASBESTOS CONTINGENCIES
               The Company is a defendant in a number of lawsuits, some of
          which involve claims of multiple persons, in which the plaintiffs
          allege that certain of their injuries were caused by, among other
          things, exposure to asbestos during, and as a result of, their
          employment or association with the Company or exposure to
          products containing asbestos produced or sold by the Company.
          The lawsuits generally relate to products the Company has not
          sold for at least 20 years.  At June 30, 1999, the number of such
          claims pending was approximately 94,700, as compared with 86,400
          at December 31, 1998.  In 1998, approximately 22,900 of such
          claims were received and 13,900 were settled or dismissed.
          During the quarter and six-month periods ended June 30, 1999,
          approximately 7,000 and 16,300 of such claims were received and
          3,600 and 8,000 of such claims were settled or dismissed.
          However, the foregoing claim and settlement figures as of and for
          the quarter and six-month periods ended June 30, 1999, do not
          reflect the fact that as of June 30, 1999, the Company has
          reached agreements under which it will settle approximately
          27,000 of the pending asbestos-related claims over an extended
          period.

               The Company maintains a liability for estimated asbestos-
          related costs for claims filed to date and an estimate of claims
          expected to be filed over a 10 year period (i.e., through 2009).
          The Company's estimate is based on the Company's view, at each
          balance sheet date, of the current and anticipated number of
          asbestos-related claims, the timing and amounts of asbestos-
          related payments, and the advice of Wharton Levin Ehrmantraut
          Klein & Nash, P.A., with respect to the current state of the law
          related to asbestos claims. However, there are inherent
          uncertainties involved in estimating asbestos-related costs and
          the Company's actual costs could exceed the Company's estimates
          due to changes in facts and circumstances after the date of each
          estimate.  Further, while the Company does not presently believe
          there is a reasonable basis for estimating asbestos-related costs
          beyond 2009 and, accordingly, no accrual has been recorded for
          any costs which may be incurred beyond 2009, there is a
          reasonable possibility that such costs may continue beyond 2009,
          and that such costs could be substantial.  As of June 30, 1999,
          an estimated asbestos-related cost accrual of $337.5, before
          consideration of insurance recoveries, has been reflected in the
          accompanying financial statements primarily in Long-term
          liabilities.  The Company estimates that annual future cash
          payments for asbestos-related costs will be approximately $37.0
          to $54.0 for each of the years 1999 through 2003, and an
          aggregate of approximately $123.0 thereafter.

               The Company believes that it has insurance coverage
          available to recover a substantial portion of its asbestos-
          related costs.  Although the Company has settled asbestos-related
          coverage matters with certain of its insurance carriers, other
          carriers have not yet agreed to settlements.  The timing and
          amount of future recoveries from these insurance carriers will
          depend on the pace of claims review and processing by such
          carriers and on the resolution of any disputes regarding coverage
          under such policies.  The Company believes that substantial
          recoveries from the insurance carriers are probable.  The Company
          reached this conclusion after considering its prior insurance-
          related recoveries in respect of asbestos-related claims;
          existing insurance policies; and the advice of Heller Ehrman
          White & McAuliffe with respect to applicable insurance coverage
          law relating to the terms and conditions of those policies.
          Accordingly, an estimated aggregate insurance recovery of $272.5,
          determined on the same basis as the asbestos-related cost
          accrual, is recorded primarily in Other assets at June 30, 1999.

               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 second quarter of 1999,
          this process resulted in the Company reflecting a $38.0 charge
          (included in Other income(expense)) for asbestos-related claims,
          net of expected insurance recoveries, based on recent cost and
          other trends experienced by the Company and other companies.
          While uncertainties are inherent in the final outcome of these
          asbestos matters and it is presently impossible to determine the
          actual costs that ultimately may be incurred and insurance
          recoveries that will be received, management currently believes
          that, based on the factors discussed in the preceding paragraphs,
          the resolution of asbestos-related uncertainties and the
          incurrence of asbestos-related costs net of related insurance
          recoveries should not have a material adverse effect on the
          Company's consolidated financial position or liquidity.  However,
          as the Company's estimates are periodically re-evaluated,
          additional charges may be necessary and such charges could be
          material to the results of the period in which they are recorded.

          LABOR MATTERS
               In connection with the USWA strike and subsequent lock-out
          by the Company, certain allegations of unfair labor practices
          ("ULPs") were filed with the National Labor Relations Board
          ("NLRB") by the USWA.  As previously disclosed, the Company
          responded to all such allegations and believed that they were
          without merit.  In July 1999, all material charges were dismissed
          by the NLRB's Regional Director.  The USWA has announced its
          intention to appeal the dismissal.  If the allegations are
          sustained on appeal, the Company could be required to make
          locked-out employees whole for back wages from the date of the
          lock-out in January 1999.  While uncertainties are inherent in
          the final outcome of such matters, the Company believes that the
          resolution of the alleged ULPs should not result in a material
          adverse effect on the Company's consolidated financial position,
          results of operations, or liquidity.

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

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

          4.   DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING
               PROGRAMS

               At June 30, 1999, the net unrealized loss on the Company's
          position in aluminum forward sales and option contracts
          (excluding the impact of those contracts discussed below which
          have been marked to market), energy forward purchase and option
          contracts, and forward foreign exchange contracts was
          approximately $15.5 (based on comparisons to applicable quarter-
          end published market prices).  As the Company's hedging
          activities are generally designed to lock-in a specified price or
          range of prices, gains or losses on the derivative contracts
          utilized in these hedging activities will generally be offset by
          losses or gains, respectively, on the transactions being hedged.

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

               From time to time in the ordinary course of business, the
          Company enters into hedging transactions to provide price risk
          management in respect of the net exposure of earnings and cash
          flows resulting from (i) anticipated sales of alumina, primary
          aluminum and fabricated aluminum products, less (ii) expected
          purchases of certain items, such as aluminum scrap, rolling
          ingot, and bauxite, whose prices fluctuate with the price of
          primary aluminum.  Forward sales contracts are used by the
          Company to effectively fix the price that the Company will
          receive for its shipments. The Company also uses option contracts
          (i) to establish a minimum price for its product shipments, (ii)
          to establish a "collar" or range of prices for the Company's
          anticipated sales, and/or (iii) to permit the Company to realize
          possible upside price movements.  As of June 30, 1999, the
          Company had sold forward, at fixed prices, approximately 12,000
          tons* of primary aluminum with respect to 1999. As of June 30,
          1999, the Company had also entered into option contracts that
          established a price range for an additional 130,000, 353,000 and
          124,000 tons of primary aluminum for 1999, 2000 and 2001,
          respectively.

               Additionally, through June 30, 1999, the Company had entered
          a series of transactions with a counterparty that will provide
          the Company with a premium over the forward market prices at the
          date of the transaction for 4,000 tons of primary aluminum per
          month during the period July 1999 through June 2001.  The Company
          also contracted with the counterparty to receive certain fixed
          prices (also above the forward market prices at the date of the
          transaction) on 8,000 tons of primary aluminum per month over a
          three year period commencing October 2001, unless market prices
          during certain periods decline below a stipulated "floor" price,
          in which case, the fixed price sales portion of the transactions
          terminate.  The price at which the October 2001 and later
          transactions terminate is well below current market prices. While
          the Company believes that the October 2001 and later transactions
          are consistent with its stated hedging objectives, these
          positions do not qualify for treatment as a "hedge" under current
          accounting guidelines.  Accordingly, these positions are "marked
          to market" each period.  For the quarter and six-month periods
          ended June 30, 1999, the Company recorded mark-to-market charges
          of $13.5 and $14.1 in Other income (expense) associated with the
          above transactions.

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

               As of June 30, 1999, the Company had sold forward virtually
          all of the alumina available to it in excess of its projected
          internal smelting requirements for 1999, 2000 and 2001 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 fuel and natural gas consumed in the
          production process.  Accordingly, the Company from time to time
          in the ordinary course of business enters into hedging
          transactions with major suppliers of energy and energy related
          financial instruments.  As of June 30, 1999, the Company had a
          combination of fixed price purchase and option contracts for the
          purchase of approximately 27,000 MMBtu of natural gas per day
          during the remainder of 1999.  As of June 30, 1999, the Company
          also held a combination of fixed price purchase and option
          contracts for an average of 249,000 and 232,000 barrels per month
          of fuel oil and diesel fuel for 1999 and 2000, respectively.

          FOREIGN CURRENCY
               The Company enters into forward exchange contracts to hedge
          material cash commitments to foreign subsidiaries or affiliates.
          At June 30, 1999, the Company had net forward foreign exchange
          contracts totaling approximately $138.9 for the purchase of 208.7
          Australian dollars from July 1999 through May 2001, in respect of
          its Australian dollar-denominated commitments for the remainder
          of 1999 through May 2001.

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

          5.   SIGNIFICANT ACQUISITIONS AND DISPOSITIONS

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

               On April 1, 1999, the Company completed the previously
          announced sale of its 50% interest in AKW L.P. ("AKW"), an
          aluminum wheels joint venture, to its partner, Accuride
          Corporation for $70.4.  The sale resulted in the Company
          recognizing a net pre-tax gain of $50.5 in the second quarter of
          1999.  The Company's equity in income of AKW for the quarter
          ended March 31, 1999, was $2.5.  The Company's equity in income
          of AKW for the quarter and six-month periods ended June 30, 1998,
          was $2.3 and $3.4, respectively.

          6.   INTERIM OPERATING SEGMENT INFORMATION

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


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

          <TABLE>
          <CAPTION>

                                                                    Quarter Ended                  Six Months Ended
                                                                       June 30,                        June 30,
                                                            -----------------------------   -----------------------------
                                                                      1999           1998             1999           1998
          -------------------------------------------------------------------------------   -----------------------------
          <S>                                               <C>            <C>              <C>            <C>
          Net Sales:
               Bauxite and Alumina:
                    Net sales to unaffiliated customers     $       110.8  $       136.9    $       200.5  $       230.2
                    Intersegment sales                               29.6           36.1             52.6           78.3
                                                            -----------------------------   -----------------------------
                                                                    140.4          173.0            253.1          308.5
                                                            -----------------------------   -----------------------------
               Primary Aluminum:
                    Net sales to unaffiliated customers             100.5          105.8            189.6          232.0
                    Intersegment sales                               63.1           61.0            112.2          127.8
                                                            -----------------------------   -----------------------------
                                                                    163.6          166.8            301.8          359.8
                                                            -----------------------------   -----------------------------
               Flat-Rolled Products                                 155.3          197.0            303.6          391.3
               Engineered Products                                  137.8          156.0            271.3          318.6
               Minority interests                                    20.6           19.2             39.4           39.8
               Eliminations                                         (92.7)         (97.2)          (164.8)        (206.2)
                                                            -----------------------------   -----------------------------
                                                            $       525.0  $       614.8    $     1,004.4  $     1,211.8
                                                            =============================   =============================
          Operating income (loss):
               Bauxite and Alumina                          $        (3.5) $        17.8    $       (11.3) $        29.4
               Primary Aluminum (1)                                   1.6           22.1            (20.5)          42.2
               Flat-Rolled Products                                   7.5           23.2             14.9           39.5
               Engineered Products                                   10.7           15.2             17.6           31.5
               Micromill                                             (3.0)          (4.7)            (6.3)          (9.9)
               Eliminations                                           1.9            (.7)             5.5            2.4
               Corporate and Other                                  (14.4)         (17.5)           (32.0)         (34.7)
                                                            -----------------------------   -----------------------------
                                                            $          .8  $        55.4    $       (32.1) $       100.4
                                                            =============================   =============================
          Depreciation and amortization:
               Bauxite and Alumina                          $         8.9  $         9.0    $        17.8  $        18.6
               Primary Aluminum                                       7.0            7.5             14.3           15.0
               Flat-Rolled Products                                   4.1            4.0              8.2            8.1
               Engineered Products                                    2.6            2.7              5.3            5.4
               Micromill                                               .7             .8              1.4            1.5
               Corporate and Other                                     .8             .9              1.5            1.7
                                                            -----------------------------   -----------------------------
                                                            $        24.1  $        24.9    $        48.5  $        50.3
                                                            =============================   =============================

          </TABLE>

          (1)  Includes potline preparation and restart costs of $2.5 and
          $9.6 for the quarter and six-month periods ended June 30,
          1999, respectively.

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

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

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

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

          RECENT EVENTS AND DEVELOPMENTS

          INCIDENT AT GRAMERCY FACILITY
               On July 5, 1999, the Company's Gramercy, Louisiana alumina
          refinery was extensively damaged by an explosion in the digestion
          area of the plant.  Approximately 24 employees were injured in the
          incident, several of them severely.

               The cause of the incident is under investigation by the Company
          and governmental agencies.  The Company's continuing investigation
          suggests that the incident was caused by a power distribution
          interruption involving the plant's on-site power house that caused
          process flow pumps to cease operating.  The Company has also
          identified certain other conditions that were present at the time
          of the incident and continues to investigate these and other
          matters.

               As previously announced, the Company expects that production
          at the plant will be curtailed for many months. The Company has
          declared force majeure with respect to certain of its sales and
          purchase contracts, but continues to work with customers to
          assist them in securing alternative sources of alumina.

               More than 30 lawsuits have been filed against the Company
          alleging, among other things, property damage and personal injury
          as a result of the incident.  In addition, a claim for alleged
          business interruption losses has been made by a neighboring
          business.  The aggregate amount of damages sought in the lawsuits
          and other claims cannot be determined at this time.

               The Company has significant amounts of property damage,
          business interruption, liability and workers compensation
          insurance coverage relating to the Gramercy incident.
          Deductibles and self-retention provisions under  the insurance
          coverage for the Gramercy incident total $5.0 million.

               The incident will cause the Company to incur incremental
          costs for clean-up and other activities in the second half of
          1999 and will cause the affected operations to incur certain
          operating losses until production can be restored.  Further,
          depending on the outcome of the ongoing investigations by various
          regulatory agencies, the Company could also be subject to certain
          fines or penalties, which may not be covered by insurance.
          However, based on what is known to date, the Company currently
          believes that the financial impact of this incident (in excess of
          the deductibles and self-retention provisions) will be largely
          offset by insurance coverage.

               The accompanying consolidated financial statements as of and
          for the periods ended June 30, 1999, do not include any provisions
          for the Gramercy incident.

               The Company has announced that its intention is to rebuild
          the Gramercy facility assuming that it is able to reach
          acceptable agreements with the various stakeholders to ensure the
          plant's competitive future.  The Company hopes to have the plant
          operating at a reduced production level in mid-2000 and to have
          the plant completely operational by the end of 2000.  However,
          there can be no assurance that the Gramercy facility will be made
          operational on this schedule.

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

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

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

               The Company and the USWA continue to communicate.  A series
          of bargaining sessions are scheduled for August 1999. The
          objective of the Company has been, and continues to be, to
          negotiate a fair labor contract that is consistent with its
          business strategy and the commercial realities of the
          marketplace.

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

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

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

               Additional portfolio analysis and initiatives are
          continuing.

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

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

          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 ended June 30, 1999 and 1998.  The
          following data should be read in conjunction with the Company's
          interim consolidated financial statements and the notes thereto,
          contained elsewhere herein.  See Note 12 of Notes to Consolidated
          Financial Statements for the year ended December 31, 1998, for
          further information regarding segments.

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


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


          <TABLE>
          <CAPTION>

                                                                    Quarter Ended                 Six Months Ended
                                                                       June 30,                       June 30,
                                                            -----------------------------  -----------------------------
                                                                      1999           1998            1999           1998
          -------------------------------------------------------------------------------  -----------------------------
          <S>                                               <C>            <C>             <C>            <C>
          Shipments: (000 tons)
               Alumina
                    Third Party                                     611.4          652.5         1,098.4        1,077.1
                    Intersegment                                    189.3          196.6           339.6          412.4
                                                            -----------------------------  -----------------------------
                         Total Alumina                              800.7          849.1         1,438.0        1,489.5
                                                            -----------------------------  -----------------------------
               Primary Aluminum
                    Third Party                                      69.0           68.3           131.9          148.8
                    Intersegment                                     46.3           42.5            85.8           86.1
                                                            -----------------------------  -----------------------------
                         Total Primary Aluminum                     115.3          110.8           217.7          234.9
                                                            -----------------------------  -----------------------------
               Flat-Rolled Products                                  59.0           63.6           111.5          123.3
                                                            -----------------------------  -----------------------------
               Engineered Products                                   43.5           44.2            84.9           90.0
                                                            -----------------------------  -----------------------------
          Average Realized Third Party Sales Price: (1)
               Alumina (per ton)                            $         170  $         197   $         171  $         198
               Primary Aluminum (per pound)                 $         .66  $         .70   $         .65  $         .71
          Net Sales:
               Bauxite and Alumina
                    Third Party (includes net sales of      $       110.8  $       136.9   $       200.5  $       230.2
                         bauxite)
                    Intersegment                                     29.6           36.1            52.6           78.3
                                                            -----------------------------  -----------------------------
                         Total Bauxite & Alumina                    140.4          173.0           253.1          308.5
                                                            -----------------------------  -----------------------------
               Primary Aluminum
                    Third Party                                     100.5          105.8           189.6          232.0
                    Intersegment                                     63.1           61.0           112.2          127.8
                                                            -----------------------------  -----------------------------
                         Total Primary Aluminum                     163.6          166.8           301.8          359.8
                                                            -----------------------------  -----------------------------
               Flat-Rolled Products                                 155.3          197.0           303.6          391.3
               Engineered Products                                  137.8          156.0           271.3          318.6
               Minority Interests                                    20.6           19.2            39.4           39.8
               Eliminations                                         (92.7)         (97.2)         (164.8)        (206.2)
                                                            -----------------------------  -----------------------------
                         Total Net Sales                    $       525.0  $       614.8   $     1,004.4  $     1,211.8
                                                            =============================  =============================
          Operating Income (Loss):
               Bauxite & Alumina                            $        (3.5) $        17.8   $       (11.3) $        29.4
               Primary Aluminum (2)                                   1.6           22.1           (20.5)          42.2
               Flat-Rolled Products                                   7.5           23.2            14.9           39.5
               Engineered Products                                   10.7           15.2            17.6           31.5
               Micromill(TM)                                         (3.0)          (4.7)           (6.3)          (9.9)
               Eliminations                                           1.9            (.7)            5.5            2.4
               Corporate                                            (14.4)         (17.5)          (32.0)         (34.7)
                                                            -----------------------------  -----------------------------
                         Total Operating Income (Loss)      $          .8  $        55.4   $       (32.1) $       100.4
                                                            =============================  =============================
          Net Income (Loss)                                 $       (15.3) $        17.4   $       (53.0) $        29.8
                                                            =============================  =============================
          Capital Expenditures                              $        13.8  $        23.0   $        30.3  $        36.7
                                                            =============================  =============================

          </TABLE>

          (1)  Average realized prices for the Company's Flat-rolled
          products and Engineered products segments are not presented
          as such prices are subject to fluctuations due to changes in
          product mix.  Average realized third party sales prices for
          alumina and primary aluminum include the impact of hedging
          activities.
          (2)  Results for the Primary aluminum segment include potline
          restart costs of $2.5 and $9.6 for the quarter and six-month
          periods ended June 30, 1999, respectively.

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

               During 1998, the Average Midwest United States transaction
          price ("AMT Price") per pound of primary aluminum experienced a
          steady decline during the year, beginning the year in the $.70 to
          $.75 range and ending the year in the low $.60 range.  During the
          first quarter of 1999, the AMT Price for primary aluminum was in
          the $.57 to $.59 per pound range most of the quarter, but
          increased in March 1999 and ended the second quarter at
          approximately $.67. The AMT Price for primary aluminum for the
          week ended July 30, 1999, was approximately $.68 per pound.

          QUARTER AND SIX MONTHS ENDED JUNE 30, 1999, COMPARED TO QUARTER
          AND SIX MONTHS ENDED JUNE 30, 1998

          SUMMARY
               The Company reported a net loss of $15.3 million for the
          second quarter of 1999, compared to a net income of $17.4 million
          for the same period of 1998.  Results for the quarter ended June
          30, 1999, included a pre-tax gain of $50.5 million on the sale of
          the Company's interests in AKW.  The gain was offset by a non-
          cash pre-tax charge of $38.0 million for asbestos-related claims
          and a pre-tax charge of $13.5 million to reflect a mark-to-market
          adjustment on certain primary aluminum hedging transactions.
          Results for the quarter ended June 30, 1998, included charges
          related to additional litigation reserves of $3.9 million.

               For the six-month period ended June 30, 1999, the Company
          reported a net loss of $53.0 million compared to net income of
          $29.8 million for the six-month period ended June 30, 1998.

               Net sales for the second quarter of 1999 totaled $525.0
          million compared to $614.8 million in the second quarter of 1998.
          Net sales for the six-month period ended June 30, 1999, were
          $1,004.4 million compared to $1,211.8 for the first six months of
          1998.

          BAUXITE AND ALUMINA
               Third party net sales of alumina declined 19% for the
          quarter ended June 30, 1999, as compared to the same period in
          1998 as a result of a 14% decline in third party average realized
          price and a 6% decline in third party alumina shipments.  The
          decline in 1999 third party average realized prices resulted from
          lower first quarter 1999 market prices for primary aluminum on
          the Company's alumina sales contracts, substantially all of which
          are linked (on a lagged basis of up to three months) to changes
          in primary aluminum market prices.  Although market prices for
          primary aluminum recovered somewhat during the second quarter of
          1999, the beneficial impacts of these price increases on the
          segment's operating income will not be fully realized until the
          third quarter of 1999.  The impact of lower prices for primary
          aluminum in 1999 on the Company's third party average realized
          prices was partially offset by allocated net gains from the
          Company's hedging activities.  The decline in third party
          shipments of alumina between the second quarter of 1999 and 1998
          resulted primarily from differences in the timing of shipments
          rather than any specific operating trend.

               Intersegment net sales for the second quarter of 1999
          declined by 22% as compared to the same period in 1998.  The
          decline in net sales was primarily due to a 14% decline in
          intersegment average realized price due to lower primary aluminum
          prices as well as a decline in intersegment shipments, resulting
          from potline curtailments at the Company's Washington smelters
          and Valco.

               For the six-month period ended June 30, 1999, third party
          net sales of alumina were 12% lower than the comparable period in
          1998 as a 14% decline in average realized prices was only
          partially offset by a 2% increase in third party shipments.  The
          decline in average realized prices during the first six months of
          1999 as compared to 1998 was attributable to the linkage of third
          party sales contracts to primary aluminum prices as more fully
          described above, offset by allocated net gains from the Company's
          hedging activities.  The increase in year-over-year shipments was
          the result of the timing of individual shipments, rather than a
          specific operating trend.

               Intersegment net sales for the six-month period ended June
          30, 1999, declined by 33% as compared to the same period in 1998.
          The decline in net sales was primarily due to the 14% decline in
          intersegment average realized price due to lower primary aluminum
          prices as well as reduced intersegment shipments, resulting from
          potline curtailments at the Company's Washington smelters and
          Valco.

               Segment operating income for the quarter and six-month
          periods ended June 30, 1999, were down significantly from the
          comparable periods of 1998 primarily as a result of the price
          and, to a lesser extent, the volume factors discussed above.

          PRIMARY ALUMINUM
               Third party net sales of primary aluminum for the second
          quarter of 1999 were down 5% as compared to the same period in
          1998 primarily as a result of a 6% decrease in average realized
          third party sales prices, reflecting lower market prices offset,
          in part, by allocated net gains from the Company's hedging
          activities.  Partially offsetting the decline in average realized
          price was a 1% increase in third party shipments.  Intersegment
          net sales in the second quarter of 1999 were up approximately 4%
          over 1998.  Intersegment shipments increased 9% from the
          comparable prior year period while average realized price dropped
          by 5%.  The decline in average realized price resulted from lower
          market prices for primary aluminum in 1999.  The increase in
          intersegment shipments between 1999 and 1998 was due to the
          timing of shipments to the Company's fabricated business units,
          as on a year-to-date basis intersegment shipments were
          essentially flat.

               For the six-month period ended June 30, 1999, third party
          net sales of primary aluminum declined approximately 16% from the
          comparable period in 1998, reflecting a 8% decline in third party
          average realized prices and an 11% reduction in third party
          shipments.  The decline in third party average realized price
          reflects lower 1999 market prices for primary aluminum offset, in
          part, by allocated net gains from the Company's hedging
          activities.  The reduction in third party shipments reflects the
          impact of the potline curtailments at the Company's Washington
          smelters.  Intersegment net sales for the first half of 1999 were
          down 12% as compared to the same period in 1998.  Intersegment
          average realized prices were down 12% reflecting lower market
          prices for aluminum.  Intersegment shipments were essentially
          flat.

               Segment operating income for the quarter and six-month
          periods ended June 30, 1999, was down significantly from the
          comparable periods of 1998.  The most significant component of
          this decline was the reduction in average realized prices
          discussed above.  However, also included in 1999 results were the
          adverse impact of the Valco and Washington smelter potline
          curtailments (including the fact that there is no mitigating
          compensation being earned in 1999 for the Valco potline
          curtailments) and costs of approximately $2.5 and $9.6 for the
          quarter and six-month periods ended June 30, 1999, respectively,
          associated with preparing and restarting potlines at Valco and
          the Washington smelters.

          FLAT-ROLLED PRODUCTS
               Net sales of flat-rolled products for the second quarter of
          1999 declined by 21% compared to the second quarter of 1998 as a
          result of a 14% decline in average realized prices and a 7%
          decline in shipments.  The reduction in shipments was due to
          reduced demand in 1999 for aerospace heat treat products offset,
          in small part, by increased shipments of general engineering
          products.  The decline in 1999 average realized prices resulted
          from a shift of product mix (from aerospace products, which have
          a higher price and operating margin, to other products) as well
          as the impact of lower market prices for primary aluminum.

               For the six-month period ended June 30, 1999, net sales of
          flat rolled products declined by 22% from the comparable period
          in 1998 as a result of a 14% decline in average realize price and
          a 10% decline in product shipments.  The declines in year-to-date
          1999 prices and shipments as compared to 1998 were attributable
          to the same factors described above for the second quarter of
          1999 and were also responsible for the significant decline in
          segment operating income both for the second quarter and year-to-
          date periods.

          ENGINEERED PRODUCTS
               Second quarter 1999 net sales of engineered products
          declined by approximately 12% compared to the second quarter of
          1998, reflecting a 10% decline in average realized prices and a
          2% decline in product shipments.  The decline in quarterly
          shipments was due to reduced demand in 1999 for aerospace
          products offset almost entirely by a strong increase in 1999
          demand for ground transportation products.  The reduction in
          average realized price between periods was attributable to the
          change in product mix (lower aerospace shipments offset by higher
          ground transportation shipments) as well as lower 1999 market
          prices for primary aluminum.  For the six-month period ended June
          30, 1999, net sales of engineered products declined by
          approximately 15% from the comparable period in 1998, as a result
          of a 10% decline in average realized prices and a 6% declined in
          product shipments.  The reasons for the year-to-date price and
          volume declines were the same as the factors that affected the
          second quarter of 1999.

               Segment operating income for the 1999 quarter and year-to-
          date periods declined from the comparable periods in 1998 as a
          result of the reduced equity in earnings from AKW as well as the
          product mix shift discussed above.

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

          CORPORATE AND OTHER
               Corporate operating expenses included corporate general and
          administrative expenses which were not allocated to the Company's
          business segments.

          LIQUIDITY AND CAPITAL RESOURCES

          OPERATING ACTIVITIES
               At June 30, 1999, the Company had working capital of $417.1
          million, compared with working capital of $476.4 million at
          December 31, 1998.  The decrease in working capital primarily
          resulted from a decrease in Cash and cash equivalents.  Increases
          in Prepaid expenses and other current assets, primarily resulting
          from increased insurance deposits, were generally offset by an
          increase in Other accrued liabilities resulting primarily from an
          increase in expected payments for asbestos-related costs.
          Changes in Receivables, Inventories and Accounts payable reflect
          reduced metal prices in 1999 as well as other factors described
          in "Results of Operations."

          INVESTING ACTIVITIES
               Capital expenditures during the six months ended June 30,
          1999, were $30.3 million. The only significant expenditure was
          the purchase of the remaining 45% interest in KLHP for
          approximately $10.0 million.  The remainder of the year-to-date
          1999 capital expenditures were primarily used to improve
          production efficiency and reduce operating costs.

               Total consolidated capital expenditures (of which
          approximately 8% is expected to be funded by the Company's
          minority partners in certain foreign joint ventures) are expected
          to be between $70 and $90 million per annum in each of 1999
          through 2001, prior to any consideration of plans to rebuild the
          Gramercy facility.  Management continues to evaluate numerous
          projects all of which would require substantial capital, both in
          the United States and overseas.  The level of capital
          expenditures may be adjusted from time to time depending on the
          Company's price outlook for primary aluminum and other products,
          the Company's ability to assure future cash flows through hedging
          or other means, the Company's financial position and other
          factors.

          FINANCING ACTIVITIES AND LIQUIDITY

               At June 30, 1999, the Company had long-term debt of $962.7
          million, compared with $963.0 million at December 31, 1998.
               At June 30, 1999, $273.7 million (of which $73.7 million
          could have been used for letters of credit) was available to the
          Company under the Credit Agreement and no amounts were
          outstanding under the revolving credit facility. Loans under the
          Credit Agreement bear interest at a spread (which varies based on
          the results of a financial test) over either a base rate or LIBOR
          at the Company's option.  The Credit Agreement does not permit
          the Company or Kaiser to pay any dividends on their common stock.

               Management believes that the Company's existing cash
          resources, together with cash flows from operations and
          borrowings under the Credit Agreement, will be sufficient to meet
          its working capital and capital expenditure requirements for the
          next year.  Additionally, with respect to long-term liquidity,
          management believes that operating cash flow, together with the
          ability to obtain both short and long-term financing, should
          provide sufficient funds to meet the Company's working capital
          and capital expenditure requirements.

          OTHER MATTERS

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

               Each of the Company's business units has developed year 2000
          plans specifically tailored to its individual situations.  A wide
          range of solutions is being implemented, including modifying
          existing systems and, in limited cases where it is cost
          effective, purchasing new systems.  Total spending related to
          these projects, which began in 1997 and is expected to continue
          through 1999, is currently estimated to be in the $10-15 million
          range. As of June 30, 1999, the Company estimates that
          approximately $3 million of year 2000 expenditures are yet to be
          incurred.  Such remaining amounts are expected to be incurred
          over the balance of 1999, primarily in the third quarter of the
          year. System modification costs are being expensed as incurred.
          Costs associated with new systems are being capitalized and will
          be amortized over the life of the system.  In total, the Company
          believes that its remediation and testing efforts are
          approximately 85% complete at July 31, 1999.  The balance is
          expected to be substantially completed by the end of the third
          quarter of the year.  The Company plans to commit the necessary
          resources for these efforts.

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

               Each business unit, including the corporate group, is
          developing a contingency plan covering the steps that would be
          taken if a year 2000 problem were to occur despite the Company's
          best efforts to identify and remediate all critical at-risk
          items.  Formal contingency plans have been completed for
          approximately 75% of the Company's facilities and their
          individual systems as of July 31, 1999.  Contingency plans for
          the remaining facilities and systems are expected to be completed
          by October 31, 1999.  When complete, each contingency plan will
          address, among other things, matters such as alternative
          suppliers for critical inputs, incremental standby labor
          requirements at the millennium to address any problems as they
          occur, and backup processing capabilities for critical equipment
          or processes.  The goal of the contingency plans will be to
          minimize any business interruptions and the associated financial
          implications.

               While the Company believes that its program is sufficient to
          identify the critical issues and associated costs necessary to
          address possible year 2000 problems in a timely manner, there can
          be no assurances that the program or underlying steps implemented
          will be successful in resolving all such issues prior to the year
          2000.  If the steps taken by the Company (or critical third
          parties) are not made in a timely manner, or are not successful
          in identifying and remediating all significant year 2000 issues,
          business interruptions or delays could occur and could have a
          material adverse impact on the Company's results and financial
          condition.  However, based on the information the Company has
          gathered to date and the Company's expectations of its ability to
          remediate problems encountered, the Company currently believes
          that significant business interruptions that would have a
          material impact on the Company's results or financial condition
          will not be encountered.

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

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

          ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                    ---------------------------------------------------

               The annual meeting of stockholders of the Company was held
          on June 8, 1999, at which meeting the stockholders voted to elect
          management's slate of nominees as directors of the Company.  The
          nominees for election as directors of the Company are listed
          below, together with the number of votes cast for, against, and
          with held with respect to each such nominees, as well as the
          number of abstentions and broker nonvotes with respect to each
          such nominee:

          Robert J. Cruikshank
               Votes For:                       46,262,605
               Votes Against:
               Votes Withheld:                     240,416
               Abstentions:
               Broker Nonvotes:

          George T. Haymaker, Jr.
               Votes For:                       46,250,028
               Votes Against:
               Votes Withheld:                     252,993
               Abstentions:
               Broker Nonvotes:

          Charles E. Hurwitz
               Votes For:                       46,239,924
               Votes Against:
               Votes Withheld:                     263,097
               Abstentions:
               Broker Nonvotes:

          Ezra G. Levin
               Votes For:                       46,269,246
               Votes Against:
               Votes Withheld:                     233,775
               Abstentions:
               Broker Nonvotes:

          Raymond J. Milchovich
               Votes For:                       46,236,800
               Votes Against:
               Votes Withheld:                     266,223
               Abstentions:
               Broker Nonvotes:

          James D. Woods
               Votes For:                       46,269,173
               Votes Against:
               Votes Withheld:                     233,848
               Abstentions:
               Broker Nonvotes:


                             PART II - OTHER INFORMATION

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

          Asbestos-related Litigation

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

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

               (a)  Exhibits.

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

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

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

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

               *10.1     Employment Agreement, dated as of June 1, 1999,
                         between the Company and Raymond J. Milchovich.

               *10.2     Restated Promissory Note, dated June 14, 1999,
                         from Raymond J. Milchovich to the Company.

               *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 June 30, 1999.  However, subsequent to June
          30, 1999, two Form 8-K's were filed.

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

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





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


                                      SIGNATURE

               Pursuant to the requirements of the Securities Exchange Act
          of 1934, the registrant has duly caused this report to be signed
          on its behalf by the undersigned thereunto duly authorized, who
          have signed this report on behalf of the registrant as the
          principal financial officer and principal accounting officer of
          the registrant, respectively.

                                             KAISER ALUMINUM & CHEMICAL
                                             CORPORATION


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


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



          Dated:    August 13, 1999