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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, 2000

                            Commission file number 1-3605




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


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


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


                                    (713) 267-3777
                 (Registrant's telephone number, including area code)







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

               At July 31, 2000, the registrant had 46,171,365 shares of
          Common Stock outstanding.





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           KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

                            PART I - FINANCIAL INFORMATION

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

                             CONSOLIDATED BALANCE SHEETS
                               (In millions of dollars)

          <TABLE>
          <CAPTION>
                                                                            June 30,    December 31,
                                                                                2000            1999
                                                                      ------------------------------
          <S>                                                         <C>             <C>
                                     ASSETS                             (Unaudited)
          Current assets:
               Cash and cash equivalents                              $        19.9   $        98.3
               Receivables:
                    Trade, net                                                177.7           154.1
                    Other                                                     193.6           112.8
               Inventories                                                    479.6           546.1
               Prepaid expenses and other current assets                      106.8           145.6
                                                                      ------------------------------
                    Total current assets                                      977.6           979.8
          Investments in and advances to unconsolidated affiliates             85.4            96.9
          Property, plant, and equipment - net                              1,078.1         1,053.7
          Deferred income taxes                                               443.2           438.2
          Other assets                                                        619.5           634.3
                                                                      ------------------------------
                         Total                                        $     3,203.8   $     3,202.9
                                                                      ==============================

                       LIABILITIES & STOCKHOLDERS' EQUITY
          Current liabilities:
               Accounts payable                                       $       243.6   $       231.7
               Accrued interest                                                37.6            37.7






               Accrued salaries, wages, and related expenses                   60.3            62.1
               Accrued postretirement medical benefit obligation -
                    current portion                                            51.5            51.5
               Other accrued liabilities                                      160.8           170.0
               Payable to affiliates                                           83.8            84.6
               Long-term debt - current portion                                 1.5              .3
                                                                      ------------------------------
                    Total current liabilities                                 639.1           637.9
          Long-term liabilities                                               687.0           727.3
          Accrued postretirement medical benefit obligation                   672.0           678.3
          Long-term debt                                                      995.8           972.5
          Minority interests                                                   98.6            96.7
          Redeemable preference stock                                          17.7            19.5
          Commitments and contingencies
          Stockholders' equity:
               Preference stock                                                  .8             1.5
               Common stock                                                    15.4            15.4
               Additional capital                                           2,236.7         2,173.0
               Accumulated deficit                                           (181.9)         (205.1)
               Accumulated other comprehensive income - additional
                    minimum pension
                    liability                                                  (1.2)           (1.2)
               Less:  Note receivable from parent                          (1,976.2)       (1,912.9)
                                                                      ------------------------------
                    Total stockholders' equity                                 93.6            70.7
                                                                      ------------------------------
                         Total                                        $     3,203.8   $     3,202.9
                                                                      ==============================

          </TABLE>

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






           KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

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

          <TABLE>
          <CAPTION>
                                                                     Quarter Ended                 Six Months Ended
                                                                       June 30,                        June 30,
                                                            ------------------------------  ------------------------------
                                                                      2000            1999            2000            1999
                                                            ------------------------------  ------------------------------
          <S>                                               <C>             <C>             <C>             <C>
          Net sales                                         $       542.5   $       525.0   $     1,108.2   $     1,004.4
                                                            ------------------------------  ------------------------------

          Costs and expenses:
               Cost of products sold                                443.4           473.9           924.1           933.8
               Depreciation and amortization                         20.3            24.1            39.9            48.5
               Selling, administrative, research and
                    development, and general                         27.3            26.2            55.6            54.2
                                                            ------------------------------  ------------------------------
                         Total costs and expenses                   491.0           524.2         1,019.6         1,036.5
                                                            ------------------------------  ------------------------------

          Operating income (loss)                                    51.5              .8            88.6           (32.1)

          Other income (expense):
               Interest expense                                     (28.2)          (27.4)          (56.6)          (55.1)
               Other - net                                           (6.5)            1.3             3.6             2.6
                                                            ------------------------------  ------------------------------

          Income (loss) before income taxes and minority
               interests                                             16.8           (25.3)           35.6           (84.6)

          (Provision) benefit for income taxes                       (6.4)            8.6           (13.7)           28.8

          Minority interests                                           .8             1.4             1.3             2.8
                                                            ------------------------------  ------------------------------

          Net income (loss)                                 $        11.2   $       (15.3)  $        23.2   $       (53.0)
                                                            ==============================  ==============================

          </TABLE>

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






           KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES

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

          <TABLE>
          <CAPTION>
                                                                                       Six Months Ended
                                                                                           June 30,
                                                                                ------------------------------
                                                                                          2000            1999
                                                                                ------------------------------
          <S>                                                                   <C>             <C>
          Cash flows from operating activities:
               Net income (loss)                                                $        23.2   $       (53.0)
               Adjustments to reconcile net income (loss) to net cash used by
                    operating activities:
                    Depreciation and amortization (including deferred financing
                         costs of $2.2 and $2.1)                                         42.1            50.6
                    Gain on sale of interest in AKW joint venture                       -               (50.5)
                    Equity in loss (income)of unconsolidated affiliates, net of
                         distributions                                                    7.9            (4.2)
                    Minority interests                                                   (1.3)           (2.8)
                    (Increase) decrease in receivables                                 (104.4)           10.8
                    Decrease in inventories                                              66.5            18.8
                    Decrease (increase) in prepaid expenses and other current
                         assets                                                          30.4           (37.4)
                    Decrease in accounts payable (associated with operating
                         activities) and accrued interest                               (12.1)          (25.2)
                    (Increase) decrease in payable to affiliates and other
                         accrued liabilities                                            (10.1)            4.3
                    Increase (decrease) in accrued and deferred income taxes              4.7           (36.5)
                    (Decrease) increase in net long-term assets and liabilities         (48.9)           11.1
                    Other                                                                 1.2             1.5
                                                                                ------------------------------
                         Net cash used by operating activities                            (.8)         (112.5)
                                                                                ------------------------------







          Cash flows from investing activities:
               Capital expenditures                                                     (85.8)          (30.3)
               Accounts payable - Gramercy-related capital expenditures                  23.9           -
               Gramercy-related property damage insurance recoveries                     24.0           -
               Net proceeds from disposition of property and investments                 15.5            70.9
               Other                                                                      1.6             (.2)
                                                                                ------------------------------
                         Net cash (used) provided by investing activities               (20.8)           40.4
                                                                                ------------------------------
          Cash flows from financing activities:
               Borrowings under revolving credit facility, net                           27.2            -
               Repayments of long-term debt                                              (4.3)            (.4)
               Capital stock issued                                                     -                 1.3
               Decrease in restricted cash, net                                         -                  .8
               Dividends paid                                                             (.3)            (.3)
               Redemption of minority interests' preference stock                        (2.3)           (1.4)
                                                                                ------------------------------
                         Net cash provided by financing activities                       20.3            -
                                                                                ------------------------------

          Net decrease in cash and cash equivalents during the period                    (1.3)          (72.1)
          Cash and cash equivalents at beginning of period                               21.2            98.3
                                                                                ------------------------------
          Cash and cash equivalents at end of period                            $        19.9   $        26.2
                                                                                ==============================

          Supplemental disclosure of cash flow information:
               Interest paid, net of capitalized interest                       $        54.5   $        53.0
               Income taxes paid                                                          7.6             8.8

          </TABLE>

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






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

          1.   GENERAL

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

               The foregoing unaudited interim consolidated financial
          statements have been prepared in accordance with generally
          accepted accounting principles for interim financial information
          and the rules and regulations of the Securities and Exchange
          Commission.  Accordingly, these financial statements do not
          include all of the disclosures required by generally accepted
          accounting principles for complete financial statements.  These
          unaudited interim consolidated financial statements should be
          read in conjunction with the audited consolidated financial
          statements for the year ended December 31, 1999.  In the opinion
          of management, the unaudited interim consolidated financial
          statements furnished herein include all adjustments, all of which
          are of a normal recurring nature, necessary for a fair statement
          of the results for the interim periods presented.

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

               Operating results for the quarter and six-month periods
          ended June 30, 2000, are not necessarily indicative of the
          results that may be expected for the year ending December 31,
          2000.

          LABOR RELATED COSTS
               The Company has been 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.  As previously announced, in June 2000, the Company and
          USWA representatives agreed to a methodology to resolve the
          remaining differences between the parties.  During July 2000, the
          USWA announced that its members had voted to accept this
          methodology.  Under the agreement between the Company and the
          USWA, the parties continued to negotiate certain matters
          until mid-August. Since the Company and the USWA were unable to
          reach a complete agreement, the parties will proceed with
          binding arbitration.  The arbitration will be completed
          by mid-September 2000 and it is expected that the USWA
          workers will return to the plants during September and October
          2000.

               As certain financial terms remain to be arbitrated,
          the Company cannot currently estimate the financial
          statement impact of the pending labor settlement.  While the
          Company expects that many of its labor and financial objectives
          will be achieved in the pending settlement, it is anticipated
          that the labor settlement will result in certain one time charges
          and re-integration costs.

               The Company has continued to accrue certain benefits (such
          as pension and other postretirement benefit costs/liabilities)
          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 based its
          accruals on the terms of the previously existing (expired) USWA
          contract.  Any differences between the amounts accrued and the
          amounts ultimately agreed to as a result of the above-described
          process will be reflected in future results during the term of
          any new contract.

          RECENT ACCOUNTING PRONOUNCEMENTS
               In June 1998, the Financial Accounting Standards Board
          ("FASB") issued Statement of Financial Accounting Standards
          ("SFAS") No. 133, Accounting for Derivative Instruments and
          Hedging Activities.  SFAS No. 133 requires companies to recognize
          all derivative instruments as assets or liabilities in the
          balance sheet and to measure those instruments at fair value.
          Under SFAS No. 133, the Company will be required to "mark-to-
          market" its hedging positions at each period-end in advance of
          recording the physical transactions to which the hedges relate.
          Changes in the fair value of the Company's open hedging positions
          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 is required on or before January 1,
          2001.  The Company will likely implement SFAS No. 133 as of
          January 1, 2001.

          2.   INCIDENT AT GRAMERCY FACILITY

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

               The cause of the incident is under investigation by the
          Company and governmental agencies.  In January 2000, the U.S.
          Mine Safety and Health Administration ("MSHA") issued 21
          citations and in March 2000 proposed that the Company be assessed
          a penalty of $.5 in connection with its investigation of the
          incident.  The citations allege, among other things, that certain
          aspects of the plant's operations were unsafe and that such mode
          of operation contributed to the explosion.  The Company disagrees
          with the substance of the citations and has challenged them and
          the associated penalty.  It is possible that other civil or
          criminal fines or penalties could be levied against the Company.
          However, as more fully explained below, based on what is known to
          date and discussions with the Company's advisors, the Company
          believes that the financial impact of this incident on operating
          results (in excess of insurance deductibles and self-retention
          provisions) will be largely offset by insurance coverage.
          Deductibles and self-retention provisions under the insurance
          coverage for the incident total $5.0, which amounts were charged
          to Cost of products sold in the third quarter of 1999.

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

               Property Damage.  The Company's insurance policies provide
          that it will be reimbursed for the costs of repairing or
          rebuilding the damaged portion of the facility using new
          materials of like kind and quality with no deduction for
          depreciation.  In 1999, based on discussions with the insurance
          carriers and their representatives and third party engineering
          reports, the Company recorded a minimum expected property damage
          reimbursement amount of $100.  The amount was classified as a
          receivable in Other assets, as such proceeds, when received, will
          be invested in property, plant and equipment.

               During the quarter ended June 30, 2000, there was
          approximately $48.0 of Gramercy-related capital spending.  During
          the quarter ended June 30, 2000, $24.0 of the insurance proceeds
          received were reflected as a reduction of the minimum property
          damage receivable based on the percentage of minimum expected
          costs to be funded by insurance proceeds to total rebuild costs.
          The balance of the minimum property damage receivable of $76.0
          will be reduced during the last six months of 2000 as insurance
          recoveries are received and construction continues.

               Clean-up and Site Preparation.  The Gramercy facility
          incurred incremental costs for clean-up and other activities
          during 1999 and has continued to incur such costs during 2000.
          These clean-up and site preparation activities have been offset
          by accruals of approximately $24.9, of which $6.6 and $10.9 were
          accrued during the quarter and six-month periods ended June 30,
          2000, for estimated insurance recoveries.

               Business Interruption.  The Company's insurance policies
          provide for the reimbursement of specified continuing expenses
          incurred during the interruption period plus lost profits (or
          less expected losses) plus other expenses incurred as a result of
          the incident.  Operations at the Gramercy facility and a sister
          facility in Jamaica, which supplies bauxite to Gramercy, will
          continue to incur operating expenses until full production at the
          Gramercy facility is restored.  The Company will also incur
          increased costs as a result of agreements to supply certain of
          Gramercy's major customers with alumina, despite the fact that
          the Company had declared force majeure with respect to the
          contracts shortly after the incident.  The Company is purchasing
          alumina from third parties, in excess of the amounts of alumina
          available from other Company-owned facilities, to supply these
          customers' needs as well as to meet intersegment requirements.
          The excess cost of such open market purchases is expected to be
          substantially offset by insurance recoveries.  However, if
          certain sublimits within the Company's insurance coverage were
          deemed to apply, the Company's results could be negatively
          affected. In consideration of the foregoing items, as of June 30,
          2000, the Company had recorded expected business interruption
          insurance recoveries totaling $106.8, of which $40.5 and $65.8
          were recorded during the quarter and six-month periods ended June
          30, 2000, as a reduction of Cost of products sold.  These amounts
          substantially offset actual expenses incurred during the periods.
          Such business interruption insurance amounts represent estimates
          of the Company's business interruption coverage based on
          discussions with the insurance carriers and their representatives
          and are therefore subject to change.

               Since production has been completely curtailed at the
          Gramercy facility, the Company has, for the time being, suspended
          depreciation at the facility.  Depreciation expense for the first
          six months of 1999 was approximately $6.0.  Once production of
          the facility is restored, depreciation will re-commence.  Such
          depreciation is expected to exceed prior historical rates
          primarily due to the increased capital costs on the newly
          constructed assets.

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

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

               Timing of Insurance Recoveries.  From the date of the
          Gramercy incident through June 30, 2000, the Company had expended
          or incurred costs or losses associated with the Gramercy incident
          (that were not capital expenditures) totaling $131.7, consisting
          of clean-up, site preparation and business interruption costs.
          From the date of the Gramercy incident through June 30, 2000,
          $88.1 of insurance recoveries related to these costs had been
          received.  In addition, during the second quarter of 2000, the
          Company spent approximately $48.0 on Gramercy-related
          construction activities and received insurance recoveries of
          $24.0 for capital expenditures related to the minimum property
          damage receivable. Gramercy-related capital spending prior to the
          second quarter of 2000 was not significant.  The Company
          continues to work with the insurance carriers to maximize the
          amount of recoveries and to minimize, to the extent possible, the
          period of time between when the Company expends funds and when it
          is reimbursed.  However, the Company will likely have to continue
          to fund an average of 30 - 60 days of property damage and
          business interruption activity, unless some other arrangement is
          agreed with the insurance carriers, and such amounts will be
          significant.  The Company believes it has sufficient financial
          resources to fund the construction and business interruption
          costs on an interim basis.  However, no assurances can be given
          in this regard.

          3.   WASHINGTON SMELTERS' OPERATING LEVEL

               As previously announced, as a result of unprecedented high
          market prices for power in the Pacific Northwest, the Company has
          temporarily curtailed approximately 128,000 tons of its annual
          primary aluminum production at the Tacoma and Mead, Washington
          smelters and has sold 100 megawatts of power that it had under
          contract through June 30, 2001.  As a result of the curtailment,
          the Company will avoid the need to purchase power on a variable
          cost basis.  Additionally, the sale of power is expected to
          substantially mitigate the cash impact of the potline curtailment
          over the contract period for which the power was sold.  To
          implement the curtailment, the Company has temporarily curtailed
          the two and one-half operating potlines at its Tacoma smelter and
          two and one-half out of a total of eight potlines at its Mead
          smelter.  One-half of a potline at the Tacoma smelter was already
          curtailed.

               As a result of the sale of the power, the Company recorded a
          net pre-tax gain of approximately $15.8, which amount was
          composed of gross proceeds of $31.3 offset by incremental excess
          power costs in the second quarter, employee termination expenses
          and other fixed commitments.  The net gain was recorded as a
          reduction of Cost of products sold.

          4.   INVENTORIES

               The classification of inventories is as follows:
          <TABLE>
          <CAPTION>

                                                                               June 30,    December 31,
                                                                                   2000            1999
                                                                         ------------------------------
             <S>                                                         <C>             <C>
             Finished fabricated aluminum products                       $         92.3  $        118.5
             Primary aluminum and work in process                                 166.0           189.4
             Bauxite and alumina                                                   96.0           124.1
             Operating supplies and repair and maintenance parts                  125.3           114.1
                                                                         ------------------------------
                  Total                                                  $        479.6  $        546.1
                                                                         ==============================

          </TABLE>

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

          5.   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, 2000, the
          balance of such accruals, which are primarily included in Long-
          term liabilities, was $46.6.  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 $9.0 for the years 2000 through 2004 and an aggregate of
          approximately $20.0 thereafter.

               As additional facts are developed and definitive remediation
          plans and necessary regulatory approvals for implementation of
          remediation are established or alternative technologies are
          developed, changes in these and other factors may result in
          actual costs exceeding the current environmental accruals.  The
          Company believes that it is reasonably possible that costs
          associated with these environmental matters may exceed current
          accruals by amounts that could range, in the aggregate, up to an
          estimated $41.0.  As the resolution of these matters is subject
          to further regulatory review and approval, no specific assurance
          can be given as to when the factors upon which a substantial
          portion of this estimate is based can be expected to be resolved.
          However, the Company is currently working to resolve certain of
          these matters.

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

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

          ASBESTOS CONTINGENCIES
               The Company is a defendant in a number of lawsuits, some of
          which involve claims of multiple persons, in which the plaintiffs
          allege that certain of their injuries were caused by, among other
          things, exposure to asbestos during, and as a result of, their
          employment or association with the Company or exposure to
          products containing asbestos produced or sold by the Company.
          The lawsuits generally relate to products the Company has not
          sold for at least 20 years. At June 30, 2000, the number of such
          claims pending was approximately 110,000, as compared with
          100,000 at December 31, 1999.  During 1999, approximately 29,300
          of such claims were received and 15,700 were settled or
          dismissed.  During the quarter and six-month periods ended June
          30, 2000, approximately 8,300 and 14,700 of such claims were
          received and 3,600 and 4,700 of such claims were settled or
          dismissed.  The foregoing claim and settlement figures as of and
          for the quarter and six-month periods ended June 30, 2000, do not
          reflect the fact that as of June 30, 2000, the Company had
          reached agreements under which it expects to settle approximately
          71,800 of the pending asbestos-related claims over an extended
          period.

               The Company maintains a liability for estimated asbestos-
          related costs for claims filed to date and an estimate of claims
          to be filed over a 10 year period (i.e., through 2009).  The
          Company's estimate is based on the Company's view, at each
          balance sheet date, of the current and anticipated number of
          asbestos-related claims, the timing and amounts of asbestos-
          related payments, the status of ongoing litigation and settlement
          initiatives, and the advice of Wharton Levin Ehrmantraut Klein &
          Nash, P.A., with respect to the current state of the law related
          to asbestos claims. However, there are inherent uncertainties
          involved in estimating asbestos-related costs and the Company's
          actual costs could exceed the Company's estimates due to changes
          in facts and circumstances after the date of each estimate.
          Further, while the Company does not presently believe there is a
          reasonable basis for estimating asbestos-related costs beyond
          2009 and, accordingly, no accrual has been recorded for any costs
          which may be incurred beyond 2009, the Company expects that such
          costs may continue beyond 2009, and that such costs could be
          substantial.  As of June 30, 2000, an estimated asbestos-related
          cost accrual of $377.8, before consideration of insurance
          recoveries, has been reflected in the accompanying interim
          consolidated financial statements primarily in Long-term
          liabilities.  The Company estimates that annual future cash
          payments for asbestos-related costs will range from approximately
          $75.0 to $100.0 in the years 2000 to 2002, approximately $35.0
          for each of the years 2003 and 2004, and an aggregate of
          approximately $50.0 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 and other 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 LLP with respect to applicable insurance
          coverage law relating to the terms and conditions of those
          policies.  Accordingly, an estimated aggregate insurance recovery
          of $319.9, determined on the same basis as the asbestos-related
          cost accrual, is recorded primarily in Other assets at June 30,
          2000.  However, no assurance can be given that the Company will
          be able to project similar recovery percentages for future
          asbestos-related claims or that the amounts related to future
          asbestos-related claims will not exceed the Company's aggregate
          insurance coverage.

               Management continues to monitor claims activity, the status
          of lawsuits (including settlement initiatives), legislative
          developments, and costs incurred in order to ascertain whether an
          adjustment to the existing accruals should be made to the extent
          that historical experience may differ significantly from the
          Company's underlying assumptions. 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") have been filed with the National Labor Relations Board
          ("NLRB") by the USWA.  As previously disclosed, the Company
          responded to all such allegations and believes that they were
          without merit.  In July 1999, the Oakland, California, regional
          office of the NLRB dismissed all material charges filed against
          the Company.  In September 1999, the union filed an appeal of
          this ruling with the NLRB general counsel's office in Washington,
          D.C. In April 2000, the Company was notified by the general
          counsel of the NLRB of the dismissal of twenty-two of twenty-four
          allegations of ULPs previously brought against it by the USWA.
          In June 2000, the general counsel of the NLRB directed the
          Oakland Regional Office to issue a complaint on two allegations
          for trial before an administrative law judge.  The Regional
          Office issued such a complaint in late June 2000.  A trial date
          has been set for November 2000. Any outcome from the trial before
          the administrative law judge would be subject to an additional
          appeal either by the USWA or the Company.  This process could
          take months or years.  If these proceedings eventually resulted
          in a definitive ruling against the Company, it could be obligated
          to provide back pay to USWA members at the five plants and such
          amount could be significant.  However, while uncertainties are
          inherent in the final outcome of such matters, the Company
          believes that the resolution of the alleged ULPs should not
          result in a material adverse effect on the Company's consolidated
          financial position, results of operations, or liquidity.

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

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

          6.   DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING
               PROGRAMS

               At June 30, 2000, the net unrealized loss on the Company's
          position in aluminum forward sales and option contracts,
          (excluding the impact of those contracts discussed below which
          have been marked to market), energy forward purchase and option
          contracts, and forward foreign exchange contracts, was
          approximately $24.9 (based on applicable quarter-end published
          market prices).  As the Company's hedging activities are
          generally designed to lock-in a specified price or range of
          prices, gains or losses on the derivative contracts utilized in
          these hedging activities will generally be offset by losses or
          gains, respectively, on the transactions being hedged.

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

               From time to time in the ordinary course of business, the
          Company enters into hedging transactions to provide price risk
          management in respect of the net exposure of earnings and cash
          flows resulting from (i) anticipated sales of alumina, primary
          aluminum and fabricated aluminum products, less (ii) expected
          purchases of certain items, such as aluminum scrap, rolling
          ingot, and bauxite, whose prices fluctuate with the price of
          primary aluminum.  Forward sales contracts are used by the
          Company to effectively fix the price that it 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, 2000, the
          Company had entered into option contracts that established a
          price range for 136,000, 362,000 and 161,000 tons* of primary
          aluminum with respect to 2000, 2001 and 2002, respectively.

               Additionally, as of June 30, 2000, the Company had also
          entered into a series of transactions with a counterparty that
          will provide it with a premium over the forward market prices at
          the date of the transaction for 2,000 tons of primary aluminum
          per month during the period July 2000 through June 2001.  The
          Company also contracted with the counterparty to receive certain
          fixed prices (also above the forward market prices at the date of
          the transaction) on 4,000 tons of primary aluminum per month over
          -------------------
          * All references to tons in this report refer to metric tons of
          2,204.6 pounds.






          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 will
          be "marked-to-market" each period.  For the quarter ended June
          30, 2000, the Company recorded mark-to-market pre-tax charges of
          $6.0 and for the six months ended June 30, 2000, recorded mark-
          to-market pre-tax gains of $8.4 in Other income (expense)
          associated with the transactions described in this paragraph.

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

          ENERGY
               The Company is exposed to energy price risk from fluctuating
          prices for fuel oil, diesel oil and natural gas consumed in the
          production process.  The Company from time to time in the
          ordinary course of business enters into hedging transactions with
          major suppliers of energy and energy related financial
          instruments.  As of June 30, 2000, the Company held option
          contracts for the purchase of approximately 13,500 MMBtu of
          natural gas per day for the period October 2000 through  December
          2000 and 9,500 MMBtu of natural gas per day for the period
          January 2001 through June 2001.  As of June 30, 2000, the Company
          also held a combination of fixed price purchase and option
          contracts for an average of 232,000 barrels per month of fuel oil
          for the remainder of 2000.

          FOREIGN CURRENCY
               The Company enters into forward exchange contracts to hedge
          material cash commitments to foreign subsidiaries or affiliates.
          At June 30, 2000, the Company had net forward foreign exchange
          contracts for the purchase of 149.5 Australian dollars from July
          2000 through July 2001, in respect of its Australian dollar
          dominated commitments from July 2000 through July 2001.  In
          addition, the Company has entered into option contracts that
          establish a price range for the purchase of 30.0 Australian
          dollars for the period July 2000 through June 2001.

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

          7.   SIGNIFICANT ACQUISITIONS AND DISPOSITIONS

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

               During the quarter ended March 31, 2000, the Company, in the
          ordinary course of business, sold certain non-operating
          properties for total proceeds of approximately $12.0.  The sale
          did not have a material impact on the Company's operating results
          for the six-month period ended June 30, 2000.

               In February 2000, the Company completed the previously
          announced sale of its Micromill assets and technology to a third
          party for a nominal payment at closing and future payments based
          on subsequent performance and profitability of the Micromill
          technology.  The sale did not have a material impact on the
          Company's operating results for the six-month period ended June
          30, 2000.

          8.   SUBSEQUENT EVENT

               During August 2000, the Company agreed to sell certain power
          that it had under contract for the third quarter of 2001. The power
          being sold is in excess of the Company's current and expected
          future operating requirements.  The power sale, which is subject to
          to final documentation, will yield net proceeds, and is
          expected to result in a net pre-tax gain, of approximately $40.0
          during the third quarter of 2000.

          9.   INTERIM OPERATING SEGMENT INFORMATION

               The Company uses a portion of its bauxite, alumina and
          primary aluminum production for additional processing at its
          downstream facilities.  Transfers between business units are made
          at estimated market prices.  The accounting policies of the
          segments are the same as those described in Note 1 of Notes to
          Consolidated Financial Statements for the year ended December 31,
          1999.  Business unit results are evaluated internally by
          management before any allocation of corporate overhead and
          without any charge for income taxes or interest expense.  See
          Note 13 of Notes to Consolidated Financial Statements for the
          year ended December 31, 1999.

          Financial information by operating segment for the quarters ended
          June 30, 2000 and 1999 is as follows:

          <TABLE>
          <CAPTION>
                                                                     Quarter Ended                   Six Months Ended
                                                                        June 30,                         June 30,
                                                            -------------------------------  -------------------------------
                                                                      2000             1999            2000             1999
          ---------------------------------------------------------------------------------  -------------------------------
          <S>                                               <C>              <C>             <C>              <C>
          Net Sales:
               Bauxite and Alumina:
                    Net sales to unaffiliated customers     $       120.2 (1)$       110.8   $       221.0 (1)$       200.5
                    Intersegment sales                               29.5 (1)         29.6            86.3 (1)         52.6
                                                            --------------   --------------  --------------   --------------
                                                                    149.7            140.4           307.3            253.1
                                                            --------------   --------------  --------------   --------------
               Primary Aluminum:
                    Net sales to unaffiliated customers             130.6            100.5           257.7            189.6
                    Intersegment sales                               57.5             63.1           139.6            112.2
                                                            --------------   --------------  --------------   --------------






                                                                    188.1            163.6           397.3            301.8
                                                            --------------   --------------  --------------   --------------
               Flat-Rolled Products                                 121.4            155.3           275.1            303.6
               Engineered Products                                  145.0            137.8           304.5            271.3
               Minority interests                                    25.3             20.6            49.9             39.4
               Eliminations                                         (87.0)           (92.7)         (225.9)          (164.8)
                                                            --------------   --------------  --------------   --------------
                                                            $       542.5    $       525.0   $     1,108.2    $     1,004.4
                                                            ==============   ==============  ==============   ==============
          Operating income (loss):
               Bauxite and Alumina                          $        13.5 (2)$        (3.5)  $        29.9 (2)$       (11.3)
               Primary Aluminum (3)                                  34.4              1.6            59.9            (20.5)
               Flat-Rolled Products                                   7.2              7.5            10.3             14.9
               Engineered Products                                   11.9 (4)         10.7            25.2 (4)         17.6
               Micromill (5)                                         -                (3.0)            (.6)            (6.3)
               Eliminations                                           1.2              1.9            (2.9)             5.5
               Corporate and Other                                  (16.7)(6)        (14.4)          (33.2)(6)        (32.0)
                                                            --------------   --------------  --------------   --------------
                                                            $        51.5    $          .8   $        88.6    $       (32.1)
                                                            ==============   ==============  ==============   ==============
          Depreciation and amortization:
               Bauxite and Alumina                          $         6.0 (7)$         8.9   $        12.0 (7)$        17.8
               Primary Aluminum                                       6.2              7.0            12.4             14.3
               Flat-Rolled Products                                   4.1              4.1             8.2              8.2
               Engineered Products                                    3.5              2.6             6.3              5.3
               Micromill (5)                                         -                  .7              .2              1.4
               Corporate and Other                                     .5               .8              .8              1.5
                                                            --------------   --------------  --------------   --------------
                                                            $        20.3    $        24.1   $        39.9    $        48.5
                                                            ==============   ==============  ==============   ==============

          </TABLE>

          (1)  Net sales for the quarter and six-month periods ended June
               30, 2000, included approximately 68,000 tons and 145,000
               tons, respectively, of alumina purchased from third parties
               and resold to certain unaffiliated customers of the Gramercy
               facility and 15,000 tons and 54,000 tons, respectively, of
               alumina purchased from third parties and transferred to the






               Company's Primary aluminum business unit.
          (2)  Operating income (loss) for the quarter and six-month
               periods ended June 30, 2000, included estimated business
               interruption insurance recoveries totaling $40.5 and $65.8,
               respectively.
          (3)  Operating income (loss) for the quarter and six-month
               periods ended June 30, 2000, included a non-recurring pre-
               tax gain of $15.8 relating to the sale of power.  Operating
               income (loss) for the quarter and six-month periods ended
               June 30, 1999, included potline restart costs of $2.5 and
               $9.6, respectively.
          (4)  Operating income (loss) for the quarter and six-month
               periods ended June 30, 2000, included $.7 of non-recurring
               pre-tax costs related to a product line exit.
          (5)  The Company's Micromill assets and technology were sold to a
               third party in February 2000.
          (6)  Operating income (loss) for the quarter and six-month
               periods ended June 30, 2000, included approximately $1.5 and
               $3.5, respectively, of non-recurring expenses related to
               Corporate staff cost reduction and efficiency initiatives.
          (7)  Depreciation was suspended for the Gramercy facility for the
               last six months of 1999 and the first six months of 2000, as
               a result of the July 5, 1999, incident.  Depreciation
               expense for the Gramercy facility for the six months ended
               June 30, 1999, was approximately $6.0.

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

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






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

               This section contains statements which constitute "forward-
          looking statements" within the meaning of the Private Securities
          Litigation Reform Act of 1995.  These statements appear in a
          number of places in this section (see, for example, "Recent
          Events and Developments," "Results of Operations," and "Liquidity
          and Capital Resources").  Such statements can be identified by
          the use of forward-looking terminology such as "believes,"
          "expects," "may," "estimates," "will," "should," "plans" or
          "anticipates" or the negative thereof or other variations thereon
          or comparable terminology, or by discussions of strategy.
          Readers are cautioned that any such forward-looking statements
          are not guarantees of future performance and involve significant
          risks and uncertainties, and that actual results may vary
          materially from those in the forward-looking statements as a
          result of various factors.  These factors include the
          effectiveness of management's strategies and decisions, general
          economic and business conditions, developments in technology, new
          or modified statutory or regulatory requirements, and changing
          prices and market conditions.  This section and Part I, Item 1.
          "Business - Factors Affecting Future Performance" in the
          Company's Annual Report on Form 10-K for the year ended December
          31, 1999, each identify other factors that could cause actual
          results to vary. No assurance can be given that these are all of
          the factors that could cause actual results to vary materially
          from the forward-looking statements.

          RECENT EVENTS AND DEVELOPMENTS

          INCIDENT AT GRAMERCY FACILITY
               In July 1999, the Company's Gramercy, Louisiana alumina
          refinery was extensively damaged by an explosion in the digestion
          area of the plant.  See Note 2 of Notes to Interim Consolidated
          Financial Statements for a full discussion regarding the incident
          at the Gramercy facility.

               Construction on the damaged part of the facility began






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

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

               From the date of the Gramercy incident through June 30,
          2000, the Company had expended or incurred costs or losses
          associated with the Gramercy incident totaling $131.7 million,
          consisting of clean-up, site preparation and business
          interruption costs.  From the date of the Gramercy incident
          through June 30, 2000, $88.1 million of insurance recoveries
          related to these costs had been received.  In addition, during
          the second quarter of 2000, the Company spent approximately $48.0
          million on Gramercy-related construction activities and received
          $24.0 million of insurance recoveries for capital expenditures
          related to the rebuilding of the Gramercy facility.  Gramercy-
          related capital spending prior to the second quarter of 2000 was
          not significant.

          WASHINGTON SMELTERS' OPERATING LEVEL
               As previously announced, as a result of unprecedented high
          market prices for power in the Pacific Northwest, the  Company
          has temporarily curtailed approximately 128,000 tons of its
          annual primary aluminum production at the Tacoma and Mead,
          Washington smelters and has sold 100 megawatts of power that it
          had under contract through June 30, 2001.  As a result of the
          curtailment, the Company will avoid the need to purchase power on
          a variable cost basis.  Additionally, the sale of power is
          expected to substantially mitigate the cash impact of the potline
          curtailment over the contract period for which the power was
          sold.  To implement the curtailment, the Company has temporarily
          curtailed the two and one-half operating potlines at its Tacoma
          smelter and two and one-half out of a total of eight potlines at
          its Mead smelter.  One-half of a potline at the Tacoma smelter
          was already curtailed.

               As a result of the sale of the power, the Company recorded a
          net pre-tax gain of approximately $15.8 million, which amount was
          composed of gross proceeds of $31.3 million offset by incremental
          excess power costs in the second quarter, employee termination
          expenses and other fixed commitments.  The net gain was recorded
          as a reduction of Cost of products sold.

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

               As previously announced, in June 2000, the Company and USWA
          representatives agreed to a methodology to resolve the remaining
          differences between the parties.  During July 2000, the USWA
          announced that its members had voted to accept this methodology.
          Under the agreement between the Company and the USWA, the parties
          continued to negotiate certain matters until mid-August. Since the
          Company and the USWA were unable to reach a complete agreement,
          the parties will proceed with binding arbitration.  The
          arbitration will be completed by mid-September 2000
          and it is expected that the USWA workers will return to the
          plants during September and October 2000.

               As certain financial terms remain to be arbitrated,
          the Company cannot currently estimate the financial
          statement impact of the pending labor settlement.  While the
          Company expects that many of its labor and financial objectives
          will be achieved in the pending settlement, it is anticipated
          that the labor settlement will result in certain one time charges
          and re-integration costs.

               In connection with the USWA strike and subsequent lock-out
          by the Company, certain allegations of unfair labor practices
          ("ULPs") have been filed with the National Labor Relations Board
          ("NLRB") by the USWA.  As previously disclosed, the Company
          responded to all such allegations and believes that they were
          without merit.  In July 1999, the Oakland, California, regional
          office of the NLRB dismissed all material charges filed against
          the Company.  In September 1999, the union filed an appeal of
          this ruling with the NLRB general counsel's office in Washington,
          D.C.  In April 2000, the Company was notified by the general
          counsel of the NLRB of the dismissal of twenty-two of twenty-four
          allegations of ULPs previously brought against it by the USWA.
          In June 2000, the general counsel of the NLRB directed the
          Oakland Regional Office to issue a complaint on two allegations
          for trial before an administrative law judge.  The Regional
          Office issued such a complaint in late June 2000.  A trial date
          has been set for November 2000.  Any outcome from the trial
          before the administrative law judge would be subject to an
          additional appeal either by the USWA or the Company.  This
          process could take months or years.  If these proceedings
          eventually resulted in a definitive ruling against the Company,
          it could be obligated to provide back pay to USWA members at the
          five plants and such amount could be significant.  However, while
          uncertainties are inherent in the final outcome of such matters,
          the Company believes that the resolution of the alleged ULPs
          should not result in a material adverse effect on the Company's
          consolidated financial position, results of operations, or
          liquidity.

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

               In addition to working to improve the performance of the
          Company's existing assets, the Company has devoted significant
          efforts analyzing its existing asset portfolio with the intent of
          focusing its efforts and capital in sectors of the industry that
          are considered most attractive and in which the Company believes
          it is well positioned to capture value.  This process has
          continued in 2000.  In the first quarter of 2000, the Company, in
          the ordinary course of business, sold certain non-operating
          properties and its Micromill assets and technology.  In June
          2000, the Company purchased the assets of a drawn tube aluminum
          fabricating operation.  This acquisition is part of the Company's
          continued focus on growing its Engineered products operations.

               Another area of emphasis has been a continuing focus on
          managing the Company's legacy liabilities.  The Company believes
          that it has insurance coverage available to recover certain
          incurred and future environmental costs and a substantial portion
          of its asbestos-related costs and is actively pursuing claims in
          this regard.  The timing and amount of future recoveries of
          asbestos-related claims from insurance carriers remain a major
          priority of the Company, but will depend on the pace of claims
          review and processing by such carriers and the resolution of any
          disputes regarding coverage under the insurance policies.

               Additional portfolio analysis and initiatives are
          continuing.

          FLAT-ROLLED PRODUCTS
               In December 1999, the Company announced that its Flat-rolled
          products business unit expects to accelerate its product mix






          shift toward higher value-added product lines such as heat-treat,
          beverage can lid and tab stock, automotive and other niche
          businesses, and away from beverage can body stock.  This process
          should be completed during the fourth quarter of 2000, at which
          point the Company will assess related issues such as employment
          levels at the Trentwood facility.  Although the shift in product
          mix is expected to have a favorable impact on the Company's
          results and financial position over the long term, it is possible
          that such a product mix shift may result in certain one-time
          charges.

          SUBSEQUENT EVENT
               During August 2000, the Company agreed to sell certain power
          that it had under contract for the third quarter of 2001.  The
          power being sold is in excess of the Company's current and expected
          future operating requirements.  The power sale, which is subject
          to final documentation, will yield net proceeds, and is expected
          to result in a net pre-tax gain, of approximately $40.0 million
          during the third quarter of 2000.

          RESULTS OF OPERATIONS

               As an integrated aluminum producer, the Company uses a
          portion of its bauxite, alumina, and primary aluminum production
          for additional processing at certain of its downstream
          facilities.  Intersegment transfers are valued at estimated
          market prices.  The following table provides selected operational
          and financial information on a consolidated basis with respect to
          the Company for the quarters and six-month periods ended June 30,
          2000 and 1999.  The following data should be read in conjunction
          with the Company's interim consolidated financial statements and
          the notes thereto, contained elsewhere herein.  See Note 13 of
          Notes to Consolidated Financial Statements for the year ended
          December 31, 1999, for further information regarding segments.

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






                    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,
                                                            -------------------------------  -------------------------------
                                                                      2000             1999            2000             1999
          ---------------------------------------------------------------------------------  -------------------------------
          <S>                                               <C>              <C>             <C>              <C>
          Shipments: (000 tons)
               Alumina
                    Third Party                                     538.9 (1)        611.4           976.4 (1)      1,098.4
                    Intersegment                                    156.7 (1)        189.3           434.3 (1)        339.6
                                                            --------------   --------------  --------------   --------------
                         Total Alumina                              695.6            800.7         1,410.7          1,438.0
                                                            --------------   --------------  --------------   --------------
               Primary Aluminum
                    Third Party                                      86.1             69.0           165.5            131.9
                    Intersegment                                     37.5             46.3            85.4             85.8
                                                            --------------   --------------  --------------   --------------
                         Total Primary Aluminum                     123.6            115.3           250.9            217.7
                                                            --------------   --------------  --------------   --------------
               Flat-Rolled Products                                  39.0             59.0            90.8            111.5
                                                            --------------   --------------  --------------   --------------
               Engineered Products                                   44.3             43.5            91.6             84.9
                                                            --------------   --------------  --------------   --------------
          Average Realized Third Party Sales Price: (2)
               Alumina (per ton)                            $         204    $         170   $         204    $         171
               Primary Aluminum (per pound)                 $         .69    $         .66   $         .71    $         .65
          Net Sales:
               Bauxite and Alumina
                    Third Party (includes net sales of
                         bauxite)                           $       120.2 (1)$       110.8   $       221.0 (1)$       200.5
                    Intersegment                                     29.5 (1)         29.6            86.3 (1)         52.6
                                                            --------------   --------------  --------------   --------------
                         Total Bauxite & Alumina                    149.7            140.4           307.3            253.1
                                                            --------------   --------------  --------------   --------------
               Primary Aluminum
                    Third Party                                     130.6            100.5           257.7            189.6
                    Intersegment                                     57.5             63.1           139.6            112.2
                                                            --------------   --------------  --------------   --------------
                         Total Primary Aluminum                     188.1            163.6           397.3            301.8
                                                            --------------   --------------  --------------   --------------
               Flat-Rolled Products                                 121.4            155.3           275.1            303.6
               Engineered Products                                  145.0            137.8           304.5            271.3
               Minority Interests                                    25.3             20.6            49.9             39.4
               Eliminations                                         (87.0)           (92.7)         (225.9)          (164.8)
                                                            --------------   --------------  --------------   --------------
                         Total Net Sales                    $       542.5    $       525.0   $     1,108.2    $     1,004.4
                                                            ==============   ==============  ==============   ==============
          Operating Income (Loss):
               Bauxite & Alumina                            $        13.5 (3)$        (3.5)  $        29.9 (3)$       (11.3)
               Primary Aluminum (4)                                  34.4              1.6            59.9            (20.5)
               Flat-Rolled Products                                   7.2              7.5            10.3             14.9
               Engineered Products                                   11.9 (5)         10.7            25.2 (5)         17.6
               Micromill (6)                                         -                (3.0)            (.6)            (6.3)
               Eliminations                                           1.2              1.9            (2.9)             5.5
               Corporate                                            (16.7)(7)        (14.4)          (33.2)(7)        (32.0)
                                                            --------------   --------------  --------------   --------------
                         Total Operating Income (Loss)      $        51.5    $          .8   $        88.6    $       (32.1)
                                                            ==============   ==============  ==============   ==============
          Net Income (Loss)                                 $        11.2    $       (15.3)  $        23.2    $       (53.0)
                                                            ==============   ==============  ==============   ==============
          Capital Expenditures                              $        69.1    $        13.8   $        85.8    $        30.3
                                                            ==============   ==============  ==============   ==============

          </TABLE>

          (1)  Net sales for the quarter and six-month periods ended June
               30, 2000, included approximately 68,000 tons and 145,000
               tons of alumina purchased from third parties and resold to
               certain unaffiliated customers and 15,000 tons and 54,000
               tons, respectively, of alumina purchased from third parties
               and transferred to the Company's Primary aluminum business
               unit.
          (2)  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.
          (3)  Operating income (loss) for the quarter and six-month
               periods ended June 30, 2000, included estimated business
               interruption insurance recoveries totaling $40.5 and $65.8,
               respectively.  Additionally, depreciation was suspended for
               the Gramercy facility, as a result of the July 5, 1999,
               incident.  Depreciation expense for the Gramercy facility
               for the six months ended June 30, 1999, was approximately
               $6.0.
          (4)  Operating income (loss) for the quarter and six-month
               periods ended June 30, 2000, included a non-recurring pre-
               tax gain of $15.8 relating to the sale of power.  Operating
               income (loss) for the quarter and six-month periods ended
               June 30, 1999, included potline restart costs of $2.5 and
               $9.6, respectively.
          (5)  Operating income (loss) for the quarter and six-month
               periods ended June 30, 2000, included $.7 of non-recurring
               pre-tax costs related to product line exit.
          (6)  The Company's Micromill assets and technology were sold to a
               third party in February 2000.
          (7)  Operating income (loss) for the quarter and six-month
               periods ended June 30, 2000, included approximately $1.5 and
               $3.5, respectively, of non-recurring expenses related to
               Corporate staff cost reduction and efficiency initiatives.

          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 6
          of Notes to Interim Consolidated Financial Statements for a
          discussion of the Company's hedging activities.

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

               During 1999, the Average Midwest United States transaction
          price ("AMT price") per pound of primary aluminum declined from
          the low $.60 range at the beginning of the year to a low of
          approximately $.57 per pound in February and then began a steady
          increase ending 1999 at $.79 per pound.  During the first quarter
          of 2000, the average AMT price was $.79 per pound.  During the
          second quarter of 2000, the average AMT price was $.72 per pound,
          however, in mid-June the price began to increase ending the
          second quarter at approximately $.77 per pound.  The average AMT
          price for primary aluminum for the week ended July 28, 2000, was
          approximately $.76 per pound.

          QUARTER AND SIX MONTHS ENDED JUNE 30, 2000, COMPARED TO QUARTER
          AND SIX MONTHS ENDED JUNE 30, 1999

          SUMMARY
               The Company reported net income of $11.2 million for the
          second quarter of 2000, compared to a net loss of $15.3 million
          for the same period of 1999.  However, second quarter 2000
          results included a non-recurring pre-tax gain of $15.8 million
          relating to the sale of power discussed above offset by certain
          non-recurring pre-tax severance and relocation costs associated
          with Corporate restructuring initiatives and product line exit of
          $2.0 million. Results for the quarter ended June 30, 2000, also
          included pre-tax losses of $6.0 million to reflect mark-to-market
          adjustments on certain primary aluminum hedging transactions.

               For the six-month period ended June 30, 2000, the Company
          reported net income of $23.2 million, compared to a net loss of
          $53.0 million for the six-month period ended June 30, 1999.  In
          addition to the second quarter 2000 non-recurring items described
          above, results for the six months ended June 30, 2000, included
          pre-tax gains of $8.4 million to reflect mark-to-market
          adjustments on certain primary aluminum hedging transactions.

               Results for the quarter and six-month periods ended June 30,
          1999, included three essentially offsetting items. A favorable
          $50.5 million pre-tax gain on the sale of the Company's interests
          in AKW L.P., an aluminum wheel joint venture, 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.

               Net sales in the second quarter of 2000 totaled $542.5
          million compared to $525.0 million in the second quarter of 1999.
          Net sales for the six-month period ended June 30, 2000, totaled
          $1,108.2 million compared to $1,004.4 million for the six-month
          period ended June 30, 1999.

          BAUXITE AND ALUMINA
               Third party net sales of alumina increased 8% for the
          quarter ended June 30, 2000, as compared to the same period in
          1999 as a 20% increase in third party average realized prices was
          partially offset by a 12% decrease in third party shipments.  The
          increase in average realized prices was due to an increase in
          primary aluminum market prices related to the Company's primary
          aluminum-linked customers sales contracts, partially offset by
          allocated net losses from the Company's hedging activities.  The
          decrease in quarter-over-quarter shipments resulted primarily
          from differences in the timing of shipments and, to a lesser
          extent, the net effect of the Gramercy incident, after
          considering the 68,000 tons of alumina purchased by the Company
          in 2000 from third parties to fulfill third party sales
          contracts.

               Intersegment net sales of alumina were essentially flat for
          the quarter ended June 30, 2000, as compared to the same period
          in 1999.  A 23% increase in the intersegment average realized
          price was offset by a 17% decrease in intersegment shipments.
          The increase in the intersegment average realized price is the
          result of increases in primary aluminum prices from period to
          period as intersegment transfers are made on the basis of market
          prices on a lagged basis of one month.  The decrease in shipments
          was due to the timing of shipments as well as the unfavorable
          impact of the curtailments of the potlines at the Company's
          Washington smelters in mid-June 2000 as discussed above.
          Intersegment net sales for the second quarter 2000 included
          approximately 15,000 tons of alumina purchased from third-parties
          and transferred to the Primary aluminum business unit.

               For the six-month period ended June 30, 2000, third party
          net sales of alumina were 10% higher than the comparable period
          in 1999 as a 19% increase in third party average realized prices
          was partially offset by an 11% decrease in third party shipments.
          The increase in average realized prices and decrease in third
          party shipments during the first six months of 2000 as compared
          to 1999 was attributable to the same price and volume factors
          discussed above.  Third party net sales included approximately
          145,000 tons of alumina purchased by the Company from third
          parties to fulfill third party sales contracts.

               Intersegment net sales for the six-month period ended June
          30, 2000, increased 64% as compared to the same period in 1999.
          The increase was due to a 28% increase in the intersegment
          average realized price and a 28% increase in intersegment
          shipments.  The increase in the intersegment average realized
          price is the result of increases in primary aluminum prices from
          period to period as intersegment transfers are made on the basis
          of market prices on a lagged basis of one month.  The increase in
          shipments was due to the favorable impact of operating more
          potlines at the Company's smelters during the first four months
          of 2000 as compared to the same months in 1999.  Intersegment net
          sales for the year to date 2000 period included approximately
          54,000 tons of alumina purchased from third-parties and
          transferred to the Primary aluminum business unit.

               Segment operating income for the quarter and six-month
          periods ended June 30, 2000, increased from the comparable
          periods in 1999 primarily as the result of the increases in the
          average realized prices offset in part by the net decrease in
          shipments as discussed above.

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

          PRIMARY ALUMINUM
               Third party net sales of primary aluminum were up 30% for
          the second quarter of 2000, as compared to the same period in
          1999 as a result of a 25% increase in third party shipments and a
          5% increase in third party averaged realized prices.  The
          increase in shipments was primarily due to the favorable impact
          of the increased operating rate at the Company's 90%-owned Volta
          Aluminium Company Limited ("Valco") and Washington smelters
          offset, in part, by the mid-June 2000 curtailment of the potlines
          at the Washington smelters discussed above.  The increase in the
          average realized prices reflects the 13% increase in primary
          aluminum market prices, partially offset by allocated net losses
          from the Company's hedging activities. Intersegment net sales
          were down approximately 9% between the second quarter of 2000 and
          the second quarter of 1999.  This decrease was the result of a
          19% decrease in intersegment shipments offset, in part, by a 13%
          increase in intersegment average realized prices.  The increase
          in the intersegment average realized price was due to higher
          market prices for primary aluminum.

               For the six-month period ended June 30, 2000, third party
          sales of primary aluminum increased approximately 36% from the
          comparable period in 1999, reflecting a 25% increase in third
          party shipments and a 9% increase in third party average realized
          prices.  The increases in year-to-date 2000 shipments and prices
          compared to 1999 were attributable to the same factors described
          above.  Intersegment net sales for the first half of 2000 were up






          24% as compared to the same period in 1999.  This increase
          primarily resulted from a 25% increase in average realized prices
          reflecting higher market prices for primary aluminum.
          Intersegment shipments were essentially flat.

               Segment operating income for the quarter and six-month
          periods ended June 30, 2000, was up from the comparable periods
          1999.  The primary reason for the increases was the improvements
          in average realized prices and net shipments discussed above.
          However, both years' operating results included several non-
          recurring transactions.  The quarter and six-month periods ended
          June 30, 2000, results included a net gain of $15.8 million
          associated with the sale of power described above; while the
          quarter and six-month periods ended June 30, 1999, results
          included costs of approximately $2.5 million and $9.6 million,
          respectively, associated with preparing and restarting potlines
          at Valco and the Washington smelters.  In addition, segment
          operating income for the quarter and six-month periods ended June
          30, 2000, have been adversely affected by increases in alumina
          and electric power costs.  Even after excluding the excess power
          costs experienced by the Company in the second quarter in the
          Pacific Northwest, power costs have increased.  As previously
          reported, new agreements entered into in both Ghana and Wales
          will provide for increased power stability but at increased
          costs.

          FLAT-ROLLED PRODUCTS
               Net sales of flat-rolled products decreased by 22% during
          the second quarter 2000 as compared to 1999 as a 34% decrease in
          shipments was offset by an 18% increase in average realized
          prices.  The decrease in shipments was primarily due to reduced
          shipments of can body stock as a part of the Company's planned
          exit from this product line. Offsetting the reduced can body
          stock shipments was a modest quarter over quarter improvement in
          heat-treat products.  The increase in average realized prices
          primarily reflects the change in product mix (resulting from the
          can stock body exit) as well as the pass through to customers of
          increased market prices for primary aluminum.






               For the six-month period ended June 30, 2000, net sales of
          flat-rolled products decreased by 9% as compared to the same
          period in 1999 as a 19% decrease in shipments was offset by a 11%
          increase in average realized prices.  The decline in year-to-date
          2000 shipments is primarily attributable to the aforementioned
          decline in can body stock offset, in part, by increased shipments
          of general engineering heat-treat products.  The increase in the
          average realized price reflects the pass-through to customers of
          increased market prices for primary aluminum offset, in part, by
          the substantial decline in the demand for aerospace heat-treat
          products subsequent to the first quarter of 1999.

               The decrease in segment operating income in the quarter and
          the six-month periods ended June 30, 2000, were attributable to
          the same factors described above.  Segment operating income also
          reflects the benefit of lower plant overhead and reduced major
          maintenance spending.

          ENGINEERED PRODUCTS
               Net sales of engineered products increased approximately 5%
          during the second quarter 2000 as compared to 1999, reflecting a
          2% increase in product shipments and a 3% increase in average
          realized prices.  Increased product shipments are the result of
          increased demand in the distribution market offset by reduced
          engineered component deliveries resulting from a product line
          exit.  The increase in average realized prices reflects increased
          prices for soft alloy extrusions offset, in part, by a shift in
          product mix.  For the six-month period ended June 30, 2000, net
          sales of engineered products increased approximately 12% as
          compared to the same period in 1999 as the result of an 8%
          increase in product shipments and a 4% increase in average
          realized prices.  In addition to the factors described above for
          the quarter ended June 30, 2000, the price and value factors for
          the six-month period ended June 30, 2000, also reflect a short-
          term market related spike in certain hard alloy extrusion
          products.  The changes in average realized prices for the quarter
          and six-month periods ended June 30, 2000, also reflect the pass
          through to customers of increased market prices for primary
          aluminum.






               Segment operating income increased in the quarter and six-
          month period ended June 30, 2000, as compared to the comparable
          periods in 1999.  These increases primarily reflect the impact of
          the demand in the distribution and redraw rod markets.  Segment
          operating income for the quarter and six month periods ended June
          30, 2000, included non-recurring severance charges of $.7 million
          related to a product line exit.  Segment operating income for the
          six months ended June 30, 1999, included equity in earnings of
          $2.5 million from the Company's 50% interest in AKW L.P., which
          was sold in April 1999.

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

          CORPORATE AND OTHER
               Corporate operating expenses represent corporate general and
          administrative expenses which are not allocated to the Company's
          business segments.  Corporate operating expenses for the quarter
          and six-month period ended June 30, 2000, included approximately
          $1.5 million and $3.5 million, respectively, of non-recurring
          expenses related to ongoing Corporate staff cost reduction and
          efficiency initiatives.

          LIQUIDITY AND CAPITAL RESOURCES

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

          OPERATING ACTIVITIES
               At June 30, 2000, the Company had working capital of $338.5
          million, compared with working capital of $341.9 million at
          December 31, 1999.  The decrease in working capital primarily
          resulted from an increase in trade and other receivables offset
          by decreases in inventories, prepaid expenses and other current
          assets and an increase in accounts payable.  The increase in






          trade receivables reflects the increased market prices for
          primary aluminum.  The increase in other receivables was
          primarily due to the sale of power (see Note 3 of Notes to
          Interim Consolidated Financial Statements) and an increase in the
          estimated business interruption insurance recoveries related to
          the Gramercy facility incident (see Note 2 of Notes to Interim
          Consolidated Financial Statements).  The decrease in inventories
          reflects a planned focus on inventory reduction and efficiency
          initiatives and the previously announced exit from production of
          can body stock at the Flat-rolled products business unit.
          Changes in trade receivables and inventories also reflect the
          factors described in "Results of Operations."  The decrease in
          prepaid expenses and other current assets resulted primarily from
          receipts by the Company of margin deposits resulting from reduced
          margin requirements due to lower end of period primary aluminum
          market prices. The increase in accounts payable was primarily due
          to the timing of payments for third party alumina purchases as
          well as increased capital spending related to the Gramercy
          incident.

          INVESTING ACTIVITIES
               Capital expenditures during the six-month period ended June
          30, 2000, were $85.8 million, consisting primarily of $54.9
          million for the rebuilding of the Gramercy facility and $13.3
          million for the purchase of the non-working capital assets of a
          drawn tube aluminum fabricating operation (see Note 7 of Notes to
          Interim Consolidated Financial Statements).  The remainder of the
          2000 capital expenditures were used to improve production
          efficiency and reduce operating costs at the Company's other
          facilities.  Total consolidated capital expenditures, excluding
          the expenditures for the rebuilding of the Gramercy facility (see
          Note 2 of Notes to Interim Consolidated Financial Statements),
          are expected to be between $80.0 and $115.0 million per annum in
          each of 2000 through 2002 (of which approximately 10% is expected
          to be funded by the Company's minority partners in certain
          foreign joint ventures).  See "- Financing Activities and
          Liquidity" below for a discussion of Gramercy-related capital
          spending.  Management continues to evaluate numerous projects all
          of which would require substantial capital, both in the United






          States and overseas.  The level of capital expenditures may be
          adjusted from time to time depending on the Company's price
          outlook for primary aluminum and other products, the Company's
          ability to assure future cash flows through hedging or other
          means, the Company's financial position and other factors.

          FINANCING ACTIVITIES AND LIQUIDITY

               As of June 30, 2000, the Company's total consolidated
          indebtedness was $997.3 million, including $37.6 million of
          borrowings under the Company's credit agreement, as amended (the
          "Credit Agreement"), compared with $972.8 million at December 31,
          1999.  As of July 31, 2000, $25.3 million of borrowings were
          outstanding under the Credit Agreement.

               At June 30, 2000, $207.8 million (of which $59.7 million
          could have been used for letters of credit) was available to the
          Company under the Credit Agreement.  Loans under the Credit
          Agreement bear interest at a spread (which varies based on the
          results of a financial test) over either a base rate or LIBOR at
          the Company's option.  During the six-month period ended June 30,
          2000, the average per annum interest rate on loans outstanding
          under the Credit Agreement was approximately 9.78%.  The Credit
          Agreement significantly restricts the Company's ability to pay
          any dividends on its common stock.

               The Company's near-term liquidity will be, as more fully
          discussed below, affected by the Gramercy incident and the amount
          of net payments for asbestos liabilities.

               From the date of the Gramercy incident through June 30,
          2000, the Company had expended or incurred costs or losses
          associated with the Gramercy incident totaling $131.7 million,
          consisting of clean-up, site preparation and business
          interruption costs. From the date of the Gramercy incident
          through June 30, 2000, $88.1 million of insurance recoveries
          related to these costs had been received.  In addition, during
          the second quarter of 2000, the Company spent approximately $48.0
          million on Gramercy-related construction activities and received






          $24.0 million of insurance recoveries for capital expenditures
          related to the rebuilding of the Gramercy facility, which amount
          reduced the minimum property damage receivable recorded in the
          fourth quarter of 1999.  Until all construction activity at the
          Gramercy facility is completed and full production is restored,
          the Company will continue to incur substantial business
          interruption costs and capital spending.  Business interruption
          costs are expected to be substantially offset by insurance
          recoveries. A minimum of an additional $76.0 million of capital
          spending is expected to be funded by insurance recoveries.  The
          remainder of the Gramercy-related capital expenditures will be
          funded by the Company using existing cash resources, funds from
          operations and/or borrowings under the Company's Credit
          Agreement.  The amount of capital expenditures to be funded by
          the Company will depend on, among other things, the ultimate cost
          and timing of the rebuild and negotiations with the insurance
          carriers.  The Company continues to work with the insurance
          carriers to maximize the amount of recoveries and to minimize, to
          the extent possible, the period of time between when the Company
          expends funds and when it is reimbursed.  The Company will likely
          have to continue to fund an average of 30 - 60 days of property
          damage and business interruption activity, unless some other
          arrangement is agreed with the insurance carriers, and such
          amounts will be significant.  The Company believes it has
          sufficient financial resources to fund the construction and
          business interruption costs on an interim basis.  However, no
          assurances can be given in this regard.

               The Company's estimated annual cash payments, prior to
          insurance recoveries, for asbestos-related costs will be
          approximately $75.0 million to $100.0 million for each of the
          years 2000 through 2002.  The Company believes that it will
          recover a substantial portion of these payments from insurance.
          However, delays in receiving these or future insurance repayments
          would have an adverse impact on the Company's liquidity.

               While no assurance can be given that existing cash sources
          will be sufficient to meet the Company's short-term liquidity
          requirements, management believes that the Company's existing






          cash resources, together with cash flows from operations and
          borrowings under the Credit Agreement, will be sufficient to
          satisfy its working capital and capital expenditure requirements
          for the next year.

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

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

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

                             PART II - OTHER INFORMATION

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

          Gramercy Litigation

               On July 5, 1999, the Company's Gramercy, Louisiana, alumina
          refinery was extensively damaged by an explosion in the digestion
          area of the plant.  The cause of the accident is under






          investigation by the Company and various governmental agencies.
          In January 2000, the U.S. Mine Safety and Health Administration
          issued 21 citations and in March 2000 proposed the Company be
          assessed a penalty of $.5 million in connection with its
          investigation of the Gramercy incident.  The citations allege,
          among other things, that certain aspects of the plant's
          operations were unsafe and that such mode of operation
          contributed to the explosion.  The Company has previously
          announced that it disagrees with the substance of the citations
          and has challenged them and the associated penalty.  It is
          possible that other civil or criminal fines or penalties could be
          levied against the Company.

               A number of employees were injured in the incident, several
          of them severely.  The Company may be liable for claims relating
          to the injured employees.  The incident has resulted in more than
          sixty lawsuits, many of which were styled as class action suits,
          being filed against the Company and others on behalf of more than
          16,000 claimants.  Such lawsuits allege, among other things,
          property damage, business interruption loss and personal injury.
          Such lawsuits were filed, on dates ranging from July 5, 1999,
          through July 9, 2000, principally in the Fortieth Judicial
          District Court for the Parish of St. John the Baptist, State of
          Louisiana or in the Twenty-Third Judicial District Court for the
          Parish of St. James or the Parish of Ascension, State of
          Louisiana.  Two of such lawsuits were filed in the United States
          District Court, Eastern District of Louisiana.  Discovery has
          begun in such cases.  The aggregate amount of damages sought in
          the lawsuits cannot be determined at this time.

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

          Asbestos-related Litigation

               The Company is a defendant in a number of lawsuits, some of






          which involve claims of multiple persons, in which the plaintiffs
          allege that certain of their injuries were caused by, among other
          things, exposure to asbestos during, and as a result of, their
          employment or association with the Company or exposure to
          products containing asbestos produced or sold by the Company.
          The portion of Note 5 of Notes to Interim Consolidated Financial
          Statements contained in this report under the heading "Asbestos
          Contingencies" is incorporated herein by reference.  See Part I,
          Item 3. "LEGAL PROCEEDINGS - Asbestos-related Litigation" in the
          Company's Form 10-K for the year ended December 31, 1999.

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

               The annual meeting of stockholders of the Company was held
          on June 8, 2000, 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
          withheld 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:     46,271,855
               Votes Against:
               Votes Withheld:     205,439
               Abstentions:
               Broker Nonvotes:

          James T. Hackett
               Votes For:     46,270,450
               Votes Against:
               Votes Withheld:     206,844
               Abstentions:
               Broker Nonvotes:

          George T. Haymaker, Jr.
               Votes For:     46,260,905






               Votes Against:
               Votes Withheld:     216,389
               Abstentions:
               Broker Nonvotes:

          Charles E. Hurwitz
               Votes For:     46,240,625
               Votes Against:
               Votes Withheld:     236,669
               Abstentions:
               Broker Nonvotes:

          Ezra G. Levin
               Votes For:     46,270,450
               Votes Against:
               Votes Withheld:     206,844
               Abstentions:
               Broker Nonvotes:

          Raymond J. Milchovich
               Votes For:     46,246,194
               Votes Against:
               Votes Withheld:     231,103
               Abstentions:
               Broker Nonvotes:

          James D. Woods
               Votes For:     46,270,450
               Votes Against:
               Votes Withheld:     206,844
               Abstentions:
               Broker Nonvotes:

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

               (a)  Exhibits.

               Exhibit No.    Exhibit






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

               *10.1     Time-Based Stock Option Grant pursuant to the
                         Kaiser 1997 Omnibus Stock Incentive Plan to Joseph
                         A. Bonn, effective September 9, 1999.

               *10.2     Time-Based Stock Option Grant pursuant to the
                         Kaiser 1997 Omnibus Stock Incentive Plan to J.
                         Kent Friedman, effective December 1, 1999.

               *10.3     Form of Non-Employee Director Stock Option
                         Agreement pursuant to the Kaiser 1997 Omnibus
                         Stock Incentive Plan.

               *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, 2000.


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






                                      SIGNATURE

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

                                             KAISER ALUMINUM & CHEMICAL
                                             CORPORATION

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


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



          Dated:    August 11, 2000