10-K

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                                    FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 For the fiscal year ended December 31, 2000 Commission file number 1-9447



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

                                    DELAWARE
                            (State of Incorporation)
                                   94-3030279
                      (I.R.S. Employer Identification No.)

             5847 SAN FELIPE, SUITE 2600, HOUSTON, TEXAS 77057-3010
               (Address of principal executive offices) (Zip Code)

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

          Securities registered pursuant to Section 12(b) of the Act:


                                                   Name of each exchange
     Title of each class                            on which registered
     -------------------                           ---------------------

 Common Stock, $.01 par value                     New York Stock Exchange


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, and (2) has been subject to such filing requirements
for the past 90 days. Yes /X/ No / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ___

As of February 28, 2001, there were 79,622,495 shares of the Common Stock of the
registrant outstanding. Based upon the New York Stock Exchange closing price on
February 28, 2001, the aggregate market value of the registrant's Common Stock
held by non-affiliates was $103.2 million.

Certain portions of the registrant's definitive proxy statement to be filed not
later than 120 days after the close of the registrant's fiscal year are
incorporated by reference into Part III of this Report on Form 10-K.


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                                      NOTE


Kaiser Aluminum Corporation's Report on Form 10-K filed with the Securities and
Exchange Commission includes all exhibits required to be filed with the Report.
Copies of this Report on Form 10-K, including only Exhibit 21 of the exhibits
listed on pages 71 -79 of this Report, are available without charge upon written
request. The registrant will furnish copies of the other exhibits to this Report
on Form 10-K upon payment of a fee of 25 cents per page. Please contact the
office set forth below to request copies of this Report on Form 10-K and for
information as to the number of pages contained in each of the exhibits and to
request copies of such exhibits:



                               Corporate Secretary
                               Kaiser Aluminum Corporation
                               5847 San Felipe, Suite 2600
                               Houston, Texas  77057-3010
                               (713) 267-3777




                                TABLE OF CONTENTS

PART I

     ITEM 1.      BUSINESS

     ITEM 2.      PROPERTIES

     ITEM 3.      LEGAL PROCEEDINGS

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

PART II

     ITEM 5.      MARKET FOR REGISTRANT'S COMMON EQUITY AND
                    RELATED STOCKHOLDER MATTERS

     ITEM 6.      SELECTED FINANCIAL DATA

     ITEM 7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS

     ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                    ACCOUNTING AND FINANCIAL DISCLOSURE

PART III

     ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     ITEM 11.     EXECUTIVE COMPENSATION

     ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                    AND MANAGEMENT

     ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PART IV

     ITEM 14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                    REPORTS ON FORM 8-K

SCHEDULE I

SIGNATURES

INDEX OF EXHIBITS

EXHIBIT 21        SUBSIDIARIES




PART I

ITEM 1.       BUSINESS

This Annual Report on Form 10-K (the "Report") 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 Report (see, for example, Item 1. "Business - Business
Operations," " - Competition," " - Environmental Matters," and " - Factors
Affecting Future Performance," Item 3. "Legal Proceedings," and Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations"). 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. Certain sections of
this Report identify other factors that could cause differences between such
forward-looking statements and actual results. 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.

GENERAL

Kaiser Aluminum Corporation (the "Company"), a Delaware corporation organized in
1987, is a subsidiary of MAXXAM Inc. ("MAXXAM"). MAXXAM and one of its
wholly-owned subsidiaries together own approximately 63% of the Company's Common
Stock, with the remaining approximately 37% publicly held. The Company, through
its wholly- owned subsidiary, Kaiser Aluminum & Chemical Corporation ("KACC"),
operates in all principal aspects of the aluminum industry - the mining of
bauxite, the refining of bauxite into alumina, the production of primary
aluminum from alumina, and the manufacture of fabricated (including
semi-fabricated) aluminum products. See Note 14 of Notes to Consolidated
Financial Statements for segment and geographical financial information. In
addition to the production utilized by KACC in its operations, KACC sells
significant amounts of alumina and primary aluminum in domestic and
international markets. The Company's operations are conducted through KACC's
business units. The following table sets forth production and third party
purchases of bauxite, alumina and primary aluminum and third party shipments and
intersegment transfers of bauxite, alumina, primary aluminum and fabricated
products for the years ended December 31, 2000, 1999 and 1998:

                                                                Sources(2)                             Uses(2)
                                                     ---------------------------------   ----------------------------------
                                                                          Third Party       Third Party      Intersegment
                                                       Production          Purchases         Shipments         Transfers
                                                     ----------------    -------------   -----------------   --------------
                                                                            (in thousands of tons*)
Bauxite -
       2000                                                   4,305.0             -                2,007.0          2,342.0
       1999                                                   5,261.0             -                1,497.0          3,515.0
       1998                                                   6,656.0             -                1,659.0          4,639.0
Alumina -
       2000                                                   2,042.9         322.0                1,927.1            751.9
       1999                                                   2,524.0         395.0                2,093.9            757.3
       1998                                                   2,964.0             -                2,250.0            750.7
Primary Aluminum -
       2000                                                     411.4         206.5                  672.4(1)         -
       1999                                                     426.4         260.1                  684.6(1)         -
       1998                                                     387.0         251.3                  668.2(1)         -

(1)  Includes both primary aluminum shipments and pounds of aluminum contained
     in fabricated aluminum product shipments. See "Management's Discussion and
     Analysis of Financial Condition and Results of Operations--Selected
     Operational and Financial Information" for an allocation of shipments
     between primary aluminum and pounds of aluminum in fabricated aluminum
     products.
(2)  Sources and uses will not equal due to the impact of inventory changes and
     alumina and metal swaps.
- ---------------------------

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


SIGNIFICANT CURRENT ITEMS

This section briefly summarizes the major issues the Company dealt with during
2000 and/or is dealing with currently and provides a cross-reference to the
applicable section for a more complete discussion of the issue.

Liquidity and Capital Resources - KACC's $300.0 million credit agreement, as
amended (the "Credit Agreement") expires in August 2001. It is the Company's and
KACC's intention to extend or replace the Credit Agreement prior to its
expiration. However, in order for the Credit Agreement to be extended, on a
short-term basis, beyond August 2001, KACC will have to have a plan to mitigate
the $225.0 million of 97/8% Senior Notes, due February 2002 (the "97/8% Senior
Notes"). For the Credit Agreement to be extended past February 2003, both the
97/8% Senior Notes and the $400.0 million of 12 3/4% Senior Subordinated Notes,
due February 2003 (the "Senior Subordinated Notes"), will have to be retired
and/or refinanced. As of February 28, 2001, KACC had received approval from the
Credit Agreement lenders to purchase up to $50.0 million of the 97/8% Senior
Notes. As of February 28, 2001, KACC has purchased approximately $1.0 million of
97/8% Senior Notes. As of February 28, 2001, there were $94.0 million of
borrowings outstanding under the Credit Agreement and remaining availability of
approximately $120.0 million. However, proceeds of approximately $130.0 million
related to 2001 power sales are expected to be received at or near March 30,
2001, and an additional $130.0 million of power proceeds will be received
periodically through October 2001 with respect to other power sales made during
the first quarter of 2001.

Consistent with its previously disclosed strategy, KACC is considering the
possible sale of part or all of its interests in certain operating assets. The
contemplated transactions are in various stages of development. KACC expects
that at least one operating asset will be sold. KACC has multiple transactions
under way. It is unlikely, however, that KACC would consummate all of the
transactions under consideration. Further, there can be no assurance as to the
likelihood, timing, or terms of such sales. The Company would expect to use the
proceeds from any such sales for debt reduction, capital spending or some
combination thereof. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Overview, Strategic Initiatives" for
additional discussion.

Incident at Gramercy Facility - In July 1999, KACC's Gramercy, Louisiana alumina
refinery was extensively damaged by an explosion. 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 until the middle of
December 2000 when partial production commenced. The plant is expected to
increase production progressively to approximately 75% of its newly rated
estimated annual capacity of 1,250,000 tons by the end of March 2001. At
February 28, 2001, the plant was operating at 70% of capacity. Based on current
estimates, construction at the facility is expected to be completed during the
third quarter of 2001. Through February 28, 2001, KACC had recorded $289.3
million of estimated insurance recoveries related to the Gramercy incident and
had collected $262.6 million of such amounts. An additional $7.0 million is
expected in March 2001. The remaining balance of approximately $20.0 million and
any additional amounts possibly due to KACC will likely not be recovered until
KACC and the insurers resolve certain outstanding issues. The insurers have
asserted that no additional business interruption amounts are due after November
30, 2000. KACC and the insurers are currently negotiating an arbitration
agreement as a means of resolving their differences. The Company anticipates
that the remaining issues will not be resolved until late 2001 or early 2002.
KACC and the Company continue to believe that a minimum of at least $290.0
million of insurance recoveries are probable, that additional amounts are owed
to KACC by the insurers, and that the likelihood of any refund by KACC of
amounts previously received from the insurers is remote. See Note 2 of Notes to
Consolidated Financial Statements for more detailed information regarding the
impact of the Gramercy incident.

Labor Matters - Prior to September 2000, when the labor dispute was settled,
KACC was operating five of its U.S. facilities with salaried employees and other
employees as a result of the September 1998 strike by the United Steelworkers of
America ("USWA") and the subsequent "lock-out" by KACC in January 1999. Under
the terms of the settlement, USWA members generally returned to the affected
plants during October 2000. The new labor contract, which expires in September
2005, provides for a 2.6% average annual increase in the overall wage and
benefit package and results in the reduction of at least 540 hourly jobs at the
five facilities (from approximately 2,800 in September 1998). See Note 5 of
Notes to Consolidated Financial Statements for a discussion of the labor dispute
and settlement. Although the USWA dispute has been settled and the workers have
returned to the facilities, two allegations of unfair labor practices ("ULPs")
remain in connection with the USWA strike and subsequent lock-out by KACC. The
Company believes that the remaining charges made against KACC by the USWA are
without merit. See Note 12 of Notes to Consolidated Financial Statements, "-
Labor Matters" for a discussion of the ULP charges.

Asbestos-Related Liability and Expected Recoveries - KACC is a defendant in a
number of lawsuits that generally relate to products KACC has not sold for more
than 20 years. The Company believes that KACC has insurance coverage available
to recover a substantial portion of its asbestos-related costs. For the year
ended December 31, 2000, a total of approximately $99.5 million of
asbestos-related settlements and defense costs were paid and partial insurance
reimbursements for asbestos-related matters totaling approximately $62.8 million
were received. See Note 12 of Notes to Consolidated Financial Statements for
additional information.

Pacific Northwest Power Sales and Operating Level - In response to the
unprecedented high market prices for power in the Pacific Northwest, KACC
temporarily curtailed primary aluminum production at the Tacoma and Mead,
Washington, smelters during the second half of 2000 and sold a portion of the
power that it had under contract through September 30, 2001. As a result of the
curtailments, KACC avoided the need to purchase power on a variable market price
basis and will receive cash proceeds sufficient to more than offset the cash
impact of the potline curtailments over the period for which the power was sold.
KACC has made additional power sales in 2001. Also, during October 2000, KACC
signed a new power contract with the Bonneville Power Administration ("BPA")
under which the BPA will provide KACC's operations in the State of Washington
with sufficient power to operate KACC's Trentwood facility as well as
approximately 40% of the combined capacity of KACC's Mead and Tacoma aluminum
smelting operations during the period from October 2001 through September 2006.
Power costs under the new contract are expected to exceed the cost of power
under KACC's current BPA contract by between 20% to 60% and, perhaps, by as much
as 100% in certain periods, and other contract terms are less favorable than
KACC's current BPA contract. KACC does not have any remarketing rights under the
new BPA contract. See Note 7 of Notes to Consolidated Financial Statements for
additional information on these matters.

BUSINESS OPERATIONS

KACC conducts its business through its five main business units (Bauxite and
alumina, Primary aluminum, Commodities marketing, Flat-rolled products and
Engineered products), each of which is discussed below.

- -  Bauxite and Alumina Business Unit
The following table lists KACC's bauxite mining and alumina refining facilities
as of December 31, 2000:


                                                                                                Annual
                                                                             Production          Total
                                                                               Capacity         Annual
                                                               Company     Available to     Production
Activity                       Facility        Location      Ownership      the Company       Capacity
- --------------             -------------   -------------    -----------   -------------    -----------
                                                                                 (tons)         (tons)

Bauxite Mining             KJBC             Jamaica              49.0%        4,500,000      4,500,000
                           Alpart(1)        Jamaica              65.0%        2,275,000      3,500,000
                                                                             ----------     ----------
                                                                              6,775,000      8,000,000
                                                                             ==========     ==========
Alumina Refining           Gramercy(2)      Louisiana           100.0%        1,250,000      1,250,000
                           Alpart           Jamaica              65.0%          942,500      1,450,000
                           QAL              Australia            28.3%        1,032,950      3,650,000
                                                                             ----------     ----------
                                                                              3,225,450      6,350,000
                                                                             ==========     ==========
- ------------
(1) Alumina Partners of Jamaica ("Alpart") bauxite is refined into alumina at
    the Alpart refinery.

(2) Production was completely curtailed from July 1999 until the middle of
    December 2000. See discussion below.

KACC is a major producer of alumina and sells significant amounts of its alumina
production in domestic and international markets. KACC's strategy is to sell a
substantial portion of the alumina available to it in excess of its internal
smelting requirements under multi-year sales contracts with prices linked to the
price of primary aluminum. See "- Competition" and "- Commodity Marketing" in
this Report. During 2000, KACC sold alumina to approximately 14 customers, the
largest and top five of which accounted for approximately 27% and 80%,
respectively, of the business unit's third-party net sales. All of KACC's
third-party sales of bauxite in 2000 were made to two customers, which sales
represent approximately 9% of the business unit's third-party net sales. KACC's
principal customers for bauxite and alumina consist of other aluminum producers,
trading intermediaries who resell raw materials to end-users, and users of
chemical grade alumina.

KJBC. The Government of Jamaica has granted KACC a mining lease for the mining
of bauxite which will, at a minimum, satisfy the bauxite requirements of KACC's
Gramercy, Louisiana, alumina refinery so that it will be able to produce at its
current rated capacity until 2020. Kaiser Jamaica Bauxite Company ("KJBC") mines
bauxite from the land which is subject to the mining lease as an agent for KACC.
Although KACC owns 49% of KJBC, it is entitled to, and generally takes, all of
its bauxite output. A substantial majority of the bauxite mined by KJBC is
refined into alumina at the Gramercy facility and the remainder is sold to two
third-party customers. KJBC's operations have been impacted by the Gramercy
incident. The Government of Jamaica has agreed to grant KACC an additional
bauxite mining lease. The new mining lease will be effective upon the expiration
of the current lease in 2020 and will enable the Gramercy facility to produce at
its rated capacity for an additional ten year period. See Note 2 of Notes to
Consolidated Financial Statements for a detailed discussion of the Gramercy
incident.

Gramercy. Alumina produced by the Gramercy refinery is primarily sold to third
parties. The Gramercy refinery produces two products: smelter grade alumina and
chemical grade alumina (e.g. hydrate). Smelter grade alumina is sold under
long-term contracts typically linked to London Metal Exchange prices ("LME
prices"). Chemical grade alumina is sold at a premium price over smelter grade
alumina. Production at the Gramercy refinery was completely curtailed in July
1999 when it was extensively damaged by an explosion in the digestion area of
the plant. Production at the plant remained curtailed until the middle of
December 2000 at which time partial production commenced. The plant is expected
to increase production progressively to approximately 75% of its newly rated
estimated annual capacity of 1,250,000 tons by the end of March 2001. At
February 28, 2001, the plant was operating at 70% of capacity. Based on current
estimates, construction at the facility is expected to be completed during the
third quarter of 2001. While production was curtailed, KACC purchased alumina
from third parties, in excess of the amounts of alumina available from other
KACC-owned facilities, to supply major customers' needs as well as to meet
intersegment requirements. See Note 2 of Notes to Consolidated Financial
Statements for additional information regarding the impact of the Gramercy
incident.

Alpart. Alpart holds bauxite reserves and owns a 1,450,000 ton per year alumina
plant located in Jamaica. KACC owns a 65% interest in Alpart, and Hydro
Aluminium a.s ("Hydro") owns the remaining 35% interest. KACC has management
responsibility for the facility on a fee basis. KACC and Hydro have agreed to be
responsible for their proportionate shares of Alpart's costs and expenses. The
Government of Jamaica has granted Alpart a mining lease and has entered into
other agreements with Alpart designed to assure that sufficient reserves of
bauxite will be available to Alpart to operate its refinery, as it may be
expanded up to a capacity of 2,000,000 tons per year, through the year 2024.
Beginning in the first half of 2000, Alpart and JAMALCO, a joint venture between
affiliates of Alcoa Inc. and the Government of Jamaica, began operating a
bauxite mining operation joint venture that consolidates their bauxite mining
operations in Jamaica, the objective of which is to optimize mining operating
and capital costs. The joint venture agreement also grants Alpart certain rights
to acquire bauxite mined from JAMALCO's reserves.

QAL. KACC owns a 28.3% interest in Queensland Alumina Limited ("QAL"), which
owns one of the largest and most competitive alumina refineries in the world,
located in Queensland, Australia. QAL refines bauxite into alumina, essentially
on a cost basis, for the account of its shareholders under long-term tolling
contracts. The shareholders, including KACC, purchase bauxite from another QAL
shareholder under long-term supply contracts. KACC has contracted with QAL to
take approximately 868,000 tons per year of alumina or pay standby charges. KACC
is unconditionally obligated to pay amounts calculated to service its share
($101.5 million at December 31, 2000) of certain debt of QAL, as well as other
QAL costs and expenses, including bauxite shipping costs.

- -   Primary Aluminum Business Unit
The following table lists KACC's primary aluminum smelting facilities as of
December 31, 2000:


                                                                Annual Rated        Total         2000
                                                                    Capacity       Annual      Average
                                                  Company      Available to         Rated    Operating
Location                           Facility     Ownership        the Company     Capacity         Rate
- ----------------              --------------   ------------    -------------    ---------    -----------
                                                                      (tons)       (tons)
United States
   Washington                    Mead                100%            200,000      200,000          85%(1)
   Washington                    Tacoma              100%             73,000       73,000          41%(1)
                                                               -------------    ---------
       Subtotal                                                      273,000      273,000
                                                               -------------    ---------


International
   Ghana                         Valco                90%            180,000      200,000          78%
   Wales, United Kingdom         Anglesey             49%             66,150      135,000         106%
                                                               -------------    ---------
       Subtotal                                                      246,150      335,000
                                                               -------------    ---------
              Total                                                  519,150      608,000
                                                               =============    =========

- --------
(1)  2000 operating rates were affected by the high market prices for electric
     power in the Pacific Northwest. Both smelters were curtailed as of December
     31, 2000. For a discussion of these matters see "Availability of Affordable
     Electric Power" below.

KACC uses proprietary retrofit and control technology in all of its smelters.
This technology - which includes the redesign of the cathodes, anodes and bus
that conduct electricity through reduction cells, improved feed systems that add
alumina to the cells, computerized process control and energy management
systems, and furnace technology for baking of anode carbon - has significantly
contributed to increased and more efficient production of primary aluminum and
enhanced KACC's ability to compete more effectively with the industry's newer
smelters.

KACC's principal primary aluminum customers consist of large trading
intermediaries and metal brokers. In 2000, KACC sold its primary aluminum
production not utilized for internal purposes to approximately 46 customers, the
largest and top five of which accounted for approximately 52% and 73%,
respectively, of the business unit's third-party net sales. See "-Competition"
in this Report. Marketing and sales efforts are conducted by personnel located
in Houston, Texas; and Tacoma and Spokane, Washington.

Operations in the United States. The Mead facility uses pre-bake technology.
Approximately 68% of Mead's 2000 production was used at KACC's Trentwood,
Washington, rolling mill and other KACC-owned facilities, with the balance being
sold to third parties. The Tacoma facility uses Soderberg technology and
produces primary aluminum and high-grade, continuous-cast, redraw rod, which
currently commands a premium price in excess of the price of primary aluminum.
The business unit maintains specialized laboratories and a miniature carbon
plant in the state of Washington which concentrate on the development of
cost-effective technical innovations such as equipment and process improvements.
As of December 31, 2000, both the Mead and Tacoma smelters were completely
curtailed and are expected to remain curtailed at least through September 30,
2001. However, KACC has continued to operate the Tacoma rod-mill. See additional
discussion below regarding electric power.

International Operations. KACC manages, and owns a 90% interest in, the Volta
Aluminium Company Limited ("Valco") aluminum smelter in Ghana. The Valco smelter
uses pre-bake technology and processes alumina supplied by KACC and the other
participant into primary aluminum under tolling contracts which provide for
proportionate payments by the participants. KACC's share of the primary aluminum
is sold to third parties. Valco's operating level has been subject to
fluctuations resulting from the amount of power it is allocated by the Volta
River Authority ("VRA"). The operating level over the last five years has ranged
from one to four out of a total of five potlines. During 2000 and 1999, Valco
operated an average of four and three potlines, respectively.

KACC owns a 49% interest in the Anglesey Aluminium Limited ("Anglesey") aluminum
smelter at Holyhead, Wales. The Anglesey smelter uses pre-bake technology. KACC
supplies 49% of Anglesey's alumina requirements and purchases 49% of Anglesey's
aluminum output. KACC sells its share of Anglesey's output to third parties.

Availability of Affordable Electric Power - Electric power represents an
important production input for KACC at its aluminum smelters and its cost can
significantly affect KACC's profitability.

United States. KACC purchases electric power for the Mead and Tacoma,
Washington, smelters from the BPA, which has supplied approximately half of the
electric power for the two plants over recent years, and from other suppliers.
The power contract with the BPA expires in September 2001, and the power
contracts with other suppliers have either expired or the underlying power has
been sold. As a result of unprecedented high market prices for electric power in
the Pacific Northwest, KACC temporarily curtailed all of the primary aluminum
production at the Tacoma and Mead, Washington, smelters and commenced selling
power that it had under contract through September 30, 2001. As a result of the
curtailment, KACC will avoid the need to purchase power on a variable market
basis and will receive cash proceeds sufficient to more than offset the cash
impact of the potline curtailments over the period for which the power was sold.
Both the Mead and Tacoma smelters are expected to remain curtailed through at
least September 30, 2001. Under a new contract with the BPA, which will run from
October 2001 through September 2006, the BPA will provide KACC with sufficient
power to operate its Trentwood facility as well as approximately 40% of the
combined capacity of its Mead and Tacoma aluminum smelting operations. Power
costs under the new contract are expected to exceed the cost of power under
KACC's current BPA contract by between 20% to 60% and, perhaps, as much as 100%
in certain periods, and other contract terms are less favorable than KACC's
current BPA contract. KACC does not have any remarketing rights under the new
BPA contract.

International. Valco and the VRA have reached an agreement, which is subject to
Parliamentary approval in 2001, that provides for sufficient power to operate at
least four of Valco's five potlines in 2001 and at least three and one-half
potlines thereafter. During early 2000, Anglesey entered into a new power
agreement that provides sufficient power to sustain its operations at full
capacity through September 2009.

- -   Commodities Marketing Business Unit
The Company's operating results are sensitive to changes in the prices of
alumina, primary aluminum, and fabricated aluminum products, and also depend to
a significant degree upon the volume and mix of all products sold. Primary
aluminum prices have historically been subject to significant cyclical
fluctuations. 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 and generally lag behind primary
aluminum prices by up to three months. From time to time in the ordinary course
of business, KACC enters into hedging transactions to provide risk management in
respect of its net exposure of earnings and cash flow related to primary
aluminum price changes. Given the significance of primary aluminum hedging
activities to the Company and KACC, the Company has begun (starting with the
year ended December 31, 2000) reporting its primary aluminum-related hedging
activities as a separate segment. Primary aluminum-related hedging activities
are managed centrally on behalf of all of KACC's business segments to minimize
transaction costs, to monitor consolidated net exposures and to allow for
increased responsiveness to changes in market factors. See Note 1 of Notes to
Consolidated Financial Statements, " - Derivative Financial Instruments," Note
13 of Notes to Consolidated Financial Statements and "Quantitative and
Qualitative Disclosures About Market Risk" for additional information regarding
primary aluminum-related hedging activities.

Hedging activities conducted in respect of the Company's cost exposure to energy
prices and foreign exchange rates are not considered a part of the Commodity
marketing segment. Rather, such activities are included in the results of the
business unit to which they relate.

- -   Flat-Rolled Products Business Unit
The Flat-rolled products business unit operates the Trentwood, Washington,
rolling mill. The business unit sells to the aerospace, transportation and
industrial ("ATI") markets (producing heat-treat sheet and plate products and
automotive brazing sheet) and the beverage container market (producing lid and
tab stock), both directly and through distributors.

During 2000, KACC shifted the product mix of its Trentwood rolling mill toward
higher value-added product lines, such as heat-treat sheet and plate, automotive
brazing sheet and beverage can lid and tab stock, and away from beverage can
body stock, wheel and common alloy tread products in an effort to enhance its
profitability. See "Management's Discussion and Analysis of Financial Condition
and Results of Operation--2000 as Compared to 1999--Flat-Rolled Products" for a
discussion of the financial impact of this product mix shift. In 2000, the
business unit sold to approximately 124 customers in the ATI markets, most of
which represented heat-treat product shipments to distributors who sell to a
variety of industrial end-users. The largest and top five customers in the ATI
markets for flat-rolled products accounted for approximately 8% and 23%,
respectively, of the business unit's third-party net sales.

KACC's flat-rolled products are also sold to beverage container manufacturing
locations primarily in the western United States and Asian Pacific Rim
countries. The largest and top five of such customers accounted for
approximately 12% and 26%, respectively, of the business unit's third-party net
sales. See "- Competition" in this Report. Sales are made directly to end-use
customers and distributors by KACC sales representatives located across the
United States and England, and by independent sales agents in Asia. However, in
addition to exiting can body stock production, beverage can lid and tab
manufacturing is also being de-emphasized to further increase the business
unit's focus on higher value- added heat-treat product lines described above.

- -   Engineered Products Business Unit
The Engineered products business unit operates soft-alloy and hard-alloy
extrusion facilities and engineered component (forgings) facilities in the
United States and Canada. Major markets for extruded products are in the ground
transportation industry, to which the business unit sells extruded shapes for
automobiles, light-duty vehicles, heavy duty trucks and trailers, and shipping
containers, and in the distribution, durable goods, defense, building and
construction, ordnance and electrical markets.

Soft-alloy extrusion facilities are located in Los Angeles, California; Sherman,
Texas; Tulsa, Oklahoma; Richmond, Virginia; and London, Ontario, Canada.
Products manufactured at these facilities include rod, bar, tube, shapes and
billet. During 2000 and 2001, the Tulsa facility is being reconfigured as a
focused production facility for standard soft- alloy extrusion products, having
transferred its cathodic protection business to the Sherman facility. Hard-alloy
extrusion facilities are located in Newark, Ohio; and Jackson, Tennessee, and
produce rod, bar, screw machine stock, redraw rod, forging stock and billet. The
business unit also extrudes seamless tubing in both hard- and soft-alloys at a
facility in Richland, Washington and produces drawn tube in both hard- and
soft-alloys at a facility in Chandler, Arizona, that it purchased in May 2000.

The business unit sells forged parts to customers in the automotive, heavy-duty
truck, general aviation, rail, machinery and equipment, and ordnance markets.
The high strength-to-weight properties of forged aluminum make it particularly
well-suited for automotive applications. Forging facilities are located in
Oxnard, California, and Greenwood, South Carolina. Through its sales and
engineering office in Southfield, Michigan, the business unit staff works with
automobile makers and other customers and plant personnel to create new
automotive component designs and to improve existing products.

In 2000, the Engineered products business unit had approximately 400 customers,
the largest and top five of which accounted for approximately 8% and 23%,
respectively, of the business unit's third-party net sales. See "- Competition"
below. Sales are made directly to end-use customers and distributors by KACC
sales representatives located across the United States.

COMPETITION

KACC competes globally with producers of bauxite, alumina, primary aluminum, and
fabricated aluminum products. Many of KACC's competitors have greater financial
resources than KACC. Primary aluminum and, to some degree, alumina are
commodities with generally standard qualities, and competition in the sale of
these commodities is based primarily upon price, quality and availability.
Aluminum competes in many markets with steel, copper, glass, plastic, and other
materials. KACC competes with numerous domestic and international fabricators in
the sale of fabricated aluminum products. KACC manufactures and markets
fabricated aluminum products for the transportation, packaging, construction,
and consumer durables markets in the United States and abroad. Sales in these
markets are made directly and through distributors to a large number of
customers. Competition in the sale of fabricated products is based upon quality,
availability, price and service, including delivery performance. KACC
concentrates its fabricating operations on selected products in which it
believes it has production expertise, high-quality capability, and geographic
and other competitive advantages. The Company believes that, assuming the
current relationship between worldwide supply and demand for alumina and primary
aluminum does not change materially, the loss of any one of KACC's customers,
including intermediaries, would not have a material adverse effect on the
Company's financial condition or results of operations.

RESEARCH AND DEVELOPMENT

Net expenditures for research and development activities were $5.6 million in
2000, $11.0 million in 1999, and $13.7 million in 1998. KACC estimates that
research and development net expenditures will be in the range of $3.0 million
to $5.0 million in 2001.

EMPLOYEES

During 2000, KACC employed an average of approximately 7,800 persons, compared
with an average of approximately 8,600 persons in 1999 and approximately 9,200
persons in 1998. At December 31, 2000, KACC employed approximately 7,300
persons. The foregoing employee counts for 2000, 1999 and 1998 include the USWA
workers who were subject to the lockout imposed by KACC as a result of the labor
dispute that was settled in September 2000. During the labor dispute, KACC
operated the five affected facilities with temporary workers who were not
included in the employee counts for 2000, 1999 and 1998.

The labor agreements with employees at the Valco smelter in Ghana, the Alpart
refinery in Jamaica and the Engineered products business unit's plants at Los
Angeles, California, and Richmond, Virginia, are scheduled to expire in 2001.

ENVIRONMENTAL MATTERS

The Company and KACC are subject to a wide variety of international, federal,
state and local environmental laws and regulations. For a discussion of this
subject, see "Factors Affecting Future Performance - KACC's current or past
operations subject it to environmental compliance, clean-up and damage claims
that may be costly" below.

FACTORS AFFECTING FUTURE PERFORMANCE

This section discusses certain factors that could cause actual results to vary,
perhaps materially, from the results described in forward-looking statements
made in this Report. Forward-looking statements in this Report are not
guarantees of future performance and involve significant risks and
uncertainties. In addition to the factors identified below, actual results may
vary materially from those in such forward-looking statements as a result of a
variety of other factors including 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 Report also identifies other factors that
could cause such differences. No assurance can be given that these factors are
all of the factors that could cause actual results to vary materially from the
forward-looking statements.

- -  Our earnings are sensitive to a number of variables
Our operating earnings are sensitive to a number of variables over which we have
no direct control. Two key variables in this regard are prices for primary
aluminum and general economic conditions.

The price of primary aluminum significantly affects our financial results.
Primary aluminum prices historically have been subject to significant cyclical
price fluctuations. The Company believes the timing of changes in the market
price of aluminum are largely unpredictable. Since 1993, the Average Midwest
United States transaction price (the "AMT price") has ranged from approximately
$.50 to $1.00 per pound.

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 our 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 alumina and primary aluminum.

- - KACC's near-term significant debt maturities could adversely affect us
KACC has significant near-term debt maturities. KACC's Credit Agreement expires
in August 2001. It is the Company's and KACC's intention to extend or replace
the Credit Agreement prior to its expiration. However, in order for the Credit
Agreement to be extended, on a short-term basis, beyond August 2001, KACC will
have to have a plan to mitigate the $225.0 million of 97/8% Senior Notes. For
the Credit Agreement to be extended past February 2003, both the 97/8% Senior
Notes and the $400.0 million of Senior Subordinated Notes will have to be
retired and/or refinanced. As of February 28, 2001, KACC had received approval
from the Credit Agreement lenders to purchase up to $50.0 million of the 97/8%
Senior Notes. As of February 28, 2001, KACC had purchased approximately $1.0
million of 97/8% Senior Notes. As of February 28, 2001, there were $94.0 million
of borrowings outstanding under the Credit Agreement and remaining availability
of approximately $120.0 million. However, proceeds of approximately $130.0
million related to 2001 power sales are expected to be received at or near March
30, 2001, and an additional $130.0 million of power proceeds will be received
periodically through October 2001 with respect to other power sales made during
the first quarter of 2001. KACC is also considering the possible sale of part or
all of its interests in certain assets. The contemplated transactions are in
various stages of development. KACC expects that at least one operating asset
will be sold. KACC has multiple transactions under way. It is unlikely, however,
that it would consummate all of the transactions under consideration. Further,
there can be no assurance as to the likelihood, timing or terms of such sales.
The Company expects to use the proceeds from any such sales for debt reduction,
capital spending or some combination thereof.

KACC's ability to refinance its debt depends primarily on its ability to
generate cash in the future. This, to a certain extent, is subject to general
economic, financial, competitive, legislative and other factors beyond KACC's
control.

- -  KACC's high leverage and debt service requirements could adversely affect us
KACC is highly leveraged and has significant debt service requirements. As of
December 31, 2000, KACC's total debt was approximately $989.4 million. KACC's
high level of debt affects our operations in several important ways:

- -    a large portion of the cash KACC generates is used to pay interest.
     Accordingly, our financial results are more vulnerable in the event of a
     downturn in our business, the aluminum industry or general economic
     conditions;

- -    the agreements governing such debt limit KACC's and our flexibility in
     planning for and reacting to changes in our business conditions. For
     example, some or all of the agreements governing such debt limit KACC's
     and/or our ability to make capital expenditures, to borrow additional money
     and to consolidate or merge with other companies;

- -    KACC may experience a competitive disadvantage because it is more highly
     leveraged than some of its competitors; and

- -    the agreements governing such debt permit KACC's and our creditors to
     accelerate payments if KACC or we default or experience a change in the
     control of our ownership as set forth in such agreements.

KACC's ability to make payments on its debt depends on its ability to generate
cash in the future. This, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors beyond KACC's
control.

- -  The asbestos-related lawsuits against KACC could continue to increase and
   could adversely impact our financial position
KACC is a defendant in numerous lawsuits in which the plaintiffs allege that
they have injuries caused by exposure to asbestos during, and as a result of,
their employment or association with KACC, or exposure to products containing
asbestos produced or sold by KACC. The lawsuits generally relate to products
KACC sold more than 20 years ago.

Our December 31, 2000, balance sheet includes a liability for estimated
asbestos-related costs of $492.4 million. We cannot assure you that this
liability will not increase in the future. In determining the amount of the
liability, we have only included estimates for the cost of claims for a ten year
period through 2010 because we do not have a reasonable basis for estimating
costs beyond that period. However, we expect that these costs may continue
beyond 2010 and that they could be substantial.

We believe KACC has insurance coverage for a substantial portion of such
asbestos-related costs. Accordingly, our December 31, 2000, balance sheet
includes a long-term receivable for estimated insurance recoveries of $406.3
million. We believe that KACC will recover a substantial portion of these
payments from insurance, but cannot assure you that KACC will receive
substantial insurance payments or that the timing of such payments will occur in
the year KACC is required to make the payments. Delays in receiving future
insurance repayments would have an adverse impact on KACC's liquidity.

Prior to insurance recoveries, we estimate that KACC's annual cash payments for
asbestos-related costs will be approximately $110.0 - $135.0 million in the
years 2001 and 2002, approximately $45.0 - $50.0 million in the years 2003 and
2004, approximately $25.0 million in the year 2005 and a total of $125.0 million
beyond 2005.

See Note 12 of Notes to Consolidated Financial Statements for additional
discussion of this matter.

- -   Power availability for smelting operations
Electric power represents an important production input for KACC at its aluminum
smelters and its cost can significantly affect KACC's profitability. Power
contracts for KACC's smelters have varying contractual terms. See "Business -
Primary Aluminum Business Unit - Availability of Affordable Electric Power" in
this Report. We cannot provide assurance that electric power will be available
in the future, at affordable prices, for KACC's smelters. Under the new contract
with the BPA, KACC's Pacific Northwest operations will not receive sufficient
power to run its smelting operations at full capacity and may have to pay as
much as 100% more than the power rate under the current contract. Depending on
the ultimate price for such power or the availability of an alternate power
supply at an acceptable price, KACC may be unable to operate the smelters in the
near or long-term. Under KACC's contract with the USWA, KACC is liable for
certain severance and supplemental unemployment benefits for laid-off workers.
Such costs related to the period from January 1, 2001 to September 30, 2001 have
been accrued to the extent that the costs are fixed and determinable. However,
the Company may become liable for additional costs. In particular, KACC would
become liable for certain early retirement benefits for USWA workers at the Mead
and Tacoma, Washington, facilities if such facilities are not restarted prior to
late 2002 or early 2003. Such costs could be significant and would adversely
impact KACC's and our operating results and liquidity.

- -  The Gramercy incident could result in adverse consequences to us
In July 1999, KACC'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. KACC may be
liable for claims relating to the injured employees. The incident has also
resulted in more than ninety lawsuits being filed against KACC alleging, among
other things, property damage, business interruption loss by other businesses
and personal injury. The aggregate amount of damages sought in the lawsuits and
other claims cannot be determined at this time. We currently believe KACC's
insurance will cover the majority of the costs of these lawsuits and claims
relating to the injured employees.

Through February 28, 2001, KACC had recorded $289.3 million of estimated
insurance recoveries related to the Gramercy incident and had collected $262.6
million of such amounts. An additional $7.0 million is expected in March 2001.
The remaining balance of approximately $20.0 million and any additional amounts
possibly due to KACC will likely not be recovered until KACC and the insurers
resolve certain outstanding issues. The insurers have asserted that no
additional business interruption amounts are due after November 30, 2000. KACC
and the insurers are currently negotiating an arbitration agreement as a means
of resolving their differences. We anticipate that the remaining issues will not
be resolved until late 2001 or early 2002. We continue to believe that a minimum
of approximately $290.0 million of insurance recoveries are probable, that
additional amounts are owed to KACC by the insurers, and that the likelihood of
any refund by KACC of amounts previously received from the insurers is remote.
However, because this matter is subject to significant uncertainties, no
assurances can be given as to the ultimate outcome of this matter or its impact
on KACC's and our near-term liquidity and results of operations.

- -  Our profits and cash flows may be adversely impacted by the results of KACC's hedging programs
KACC enters into hedging transactions to limit its exposure resulting from (1)
its anticipated sales of alumina, primary aluminum, and fabricated aluminum
products, net of expected purchase costs for items that fluctuate with primary
aluminum prices, (2) energy price risk from fluctuating prices for natural gas,
fuel oil and diesel oil used in its production process, and (3) foreign currency
requirements with respect to its cash commitments with foreign subsidiaries and
affiliates. To the extent that the prices for primary aluminum exceed the fixed
or ceiling prices established by KACC's hedging transactions or that energy
costs or foreign exchange rates are below the fixed or floor prices, our profits
and cash flow would be lower than they otherwise would have been.

Hedging activities can also have a temporary impact on our and KACC's liquidity.
KACC has established credit limits with certain counterparties related to open
forward sales and option contracts. When unrealized gains or losses on open
positions are in excess of such credit lines, KACC is entitled to receive margin
advances from the counterparties or is required to make margin advances to
counterparties, as the case may be. At December 31, 2000, the impact of margin
arrangements on KACC's and our liquidity was insignificant. However, future
increases in primary aluminum prices or decreases in foreign exchange rates
could result in KACC having to make margin advances or post additional letters
of credit and such amounts could be significant and could adversely impact
KACC's and our liquidity.

Information regarding KACC's sensitivity to certain price amounts from both an
earnings and liquidity perspective is provided in "Quantitative and Qualitative
Disclosures About Market Risk."

- -  KACC's current or past operations subject it to environmental compliance,
   clean-up and damage claims that may be costly
The operations of KACC's facilities are regulated by a wide variety of
international, federal, state and local environmental laws. These environmental
laws regulate, among other things, air and water emissions and discharges; the
generation, storage, treatment, transportation and disposal of solid and
hazardous waste; and the release of hazardous or toxic substances, pollutants
and contaminants into the environment. Compliance with these environmental laws
is costly. While legislative, regulatory and economic uncertainties make it
difficult for us to project future spending for these purposes, we currently
anticipate that in the 2001 - 2002 period, KACC's environmental capital spending
will be approximately $6.0 million per year and that KACC's operating costs will
include pollution control costs totaling approximately $27.0 million per year.
However, subsequent changes in environmental laws may change the way KACC must
operate and may force KACC to spend more then we currently project.

Additionally, KACC's current and former operations can subject it to fines or
penalties for alleged breaches of environmental laws and to other actions
seeking clean-up or other remedies under these environmental laws. KACC also may
be subject to damages related to alleged injuries to health or to the
environment, including claims with respect to certain waste disposal sites and
the clean-up of sites currently or formerly used by KACC.

Currently, KACC is subject to certain lawsuits under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"). KACC, along
with certain other companies, has been named as a Potentially Responsible Party
for clean-up costs at certain third-party sites listed on the National
Priorities List under CERCLA. As a result, KACC may be exposed not only to its
assessed share of clean-up but also to the costs of others if they are unable to
pay. Additionally, KACC's Mead, Washington, facility has been listed on the
National Priorities List under CERCLA. KACC and the regulatory authorities
agreed to a plan of remediation in January 2000.

In response to environmental concerns, we have established environmental
accruals representing our estimate of the costs we reasonably expect KACC to
incur in connection with these matters. At December 31, 2000, the balance of our
accruals, which are primarily included in our long-term liabilities, was $46.1
million. We estimate that the annual costs charged to these environmental
accruals will be approximately $3.0 million to $12.0 million per year for the
years 2001 through 2005 and an aggregate of approximately $21.0 million
thereafter. However, we cannot assure you that KACC's actual costs will not
exceed our current estimates. We believe 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 $35.0 million.
See Note 12 of Notes to Consolidated Financial Statements for additional
information.

- - The remaining allegations of Unfair Labor Practices ("ULPs") filed by the USWA
could adversely affect us In connection with the USWA strike and subsequent
lock-out by KACC, the USWA filed twenty-four allegations of ULPs. Twenty-two of
the allegations were dismissed. A trial before an administrative law judge for
the two remaining allegations commenced in November 2000 and is continuing. If
the outcome of either of these two allegations eventually results in a final
ruling against KACC, it could be obligated to provide back pay to the USWA
members and such amount could be significant. However, any outcome from the
trial before the administrative law judge would be subject to additional appeals
by the general counsel of the National Labor Relations Board (the "NLRB"), the
USWA or KACC. This process could take months or years.

- -   Ability to operate profitably in the future
We reported net income of $16.8 million for the year ended December 31, 2000
which included material non-recurring gains and losses. If such non-recurring
gains and losses were excluded from the 2000 results (see "Management's
Discussion and Analysis of Financial Condition and Results of Operation -
Summary" for a summary of non-recurring gains and losses), net income for the
year ended December 31, 2000 would have been only slightly above break-even.
While we expect that 2001 will be profitable as a result of net gains from power
sales, there can be no assurance that we will generate a profit from recurring
operations or that we will operate profitably in future periods.

- -   We operate in a highly competitive industry
The production of alumina, primary and fabricated aluminum products is highly
competitive. There are numerous companies who operate in the aluminum industry.
Certain of our competitors are substantially larger, have greater financial
resources than we do and may have other strategic advantages.

- -  KACC is subject to political and regulatory risks in a number of countries
KACC operates facilities in the United States and in a number of other
countries, including Australia, Canada, Ghana, Jamaica, and the United Kingdom.
While we believe KACC's relationships in the countries in which it operates are
generally satisfactory, we cannot assure you that future country developments or
governmental actions will not adversely affect KACC's operations particularly or
the aluminum industry generally. Among the risks inherent in KACC's operations
are unexpected changes in regulatory requirements, unfavorable legal rulings,
new or increased taxes and levies, and new or increased import or export
restrictions. KACC's operations outside of the United States are subject to a
number of additional risks, including but not limited to currency exchange rate
fluctuations, currency restrictions, and nationalization of assets.

ITEM 2.       PROPERTIES

The locations and general character of the principal plants, mines, and other
materially important physical properties relating to KACC's operations are
described in Item 1 "- Business Operations" and those descriptions are
incorporated herein by reference. KACC owns in fee or leases all the real estate
and facilities used in connection with its business. Plants and equipment and
other facilities are generally in good condition and suitable for their intended
uses, subject to changing environmental requirements. Although KACC's domestic
aluminum smelters were initially designed early in KACC's history, they have
been modified frequently over the years to incorporate technological advances in
order to improve efficiency, increase capacity, and achieve energy savings. The
Company believes that KACC's plants are cost competitive on an international
basis. However, the long-term viability of KACC's Pacific Northwest smelters may
be adversely impacted if an adequate supply of power at reasonable prices is not
ultimately available.

KACC's obligations under the Credit Agreement are secured by, among other
things, mortgages on KACC's major domestic plants (other than the Gramercy
alumina refinery). See Note 8 of Notes to Consolidated Financial Statements for
further discussion.

ITEM 3.       LEGAL PROCEEDINGS

This section contains statements which constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. See
Item 1 of this Report for cautionary information with respect to such
forward-looking statements.

GRAMERCY LITIGATION

On July 5, 1999, KACC'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. KACC may be
liable for claims relating to the injured employees. The incident has resulted
in more than ninety lawsuits, many of which were styled as class action suits,
being filed against KACC and others since July 1999 on behalf of more than
16,000 claimants. Such lawsuits allege, among other things, property damage,
business interruption loss by other businesses and personal injury. All such
lawsuits previously pending in state court are now consolidated into one action
pending in the Twenty-Third Judicial District Court for the Parish of St. James,
State of Louisiana. One lawsuit remains pending in the United States District
Court, Eastern District of Louisiana. Discovery has begun in the cases. The
aggregate amount of damages sought in the lawsuits cannot be determined at this
time. See Note 2 of Notes to Consolidated Financial Statements.

In connection with the settlement of the U.S. Mine Safety and Health
Administration's ("MSHA") investigation of the incident, KACC is paying a fine
of $.5 million but denied the alleged violations.

ASBESTOS-RELATED LITIGATION

KACC 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 KACC or exposure to products containing
asbestos produced or sold by KACC. The lawsuits generally relate to products
KACC has not manufactured for more than 20 years. The portion of Note 12 of
Notes to Consolidated Financial Statements under the heading "Asbestos
Contingencies" is incorporated herein by reference.

LABOR MATTERS

In connection with the USWA strike and subsequent lock-out by KACC, certain
allegations of ULPs were filed by the USWA with the NLRB. Twenty-two of the
twenty-four allegations of ULPs brought against KACC by the USWA have been
dismissed. A trial on the remaining two allegations before an administrative law
judge commenced in November 2000 and is continuing. The Company is unable to
estimate when the trial will be completed. If the outcome of either of these two
allegations eventually results in a final ruling against KACC, it could be
obligated to provide back pay to the USWA members and such amount could be
significant. Any outcome from the trial would be subject to additional appeals
by the general counsel of the NLRB, the USWA or KACC. This process could take
months or years. The portion of Note 12 of Notes to Consolidated Financial
Statements under the heading "Labor Matters" is incorporated herein by
reference.

OTHER MATTERS

Various other lawsuits and claims are pending against KACC. 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
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 12 of Notes to
Consolidated Financial Statements.

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

No matter was submitted to a vote of security holders of the Company during the
fourth quarter of 2000.

PART II

ITEM 5.       MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
              MATTERS

The Company's Common Stock is traded on the New York Stock Exchange under the
symbol "KLU." The number of record holders of the Company's Common Stock at
February 28, 2001, was 347. The Company has not paid any dividends on its Common
Stock during the two most recent fiscal years. The high and low sales prices for
the Company's Common Stock for each quarterly period of 2000, 1999 and 1998, as
reported on the New York Stock Exchange is set forth in the Quarterly Financial
Data on page 60 in this Report and is incorporated herein by reference.

The Credit Agreement contains restrictions on the ability of the Company to pay
dividends on or make distributions on account of the Company's Common Stock, and
the Credit Agreement and the indentures governing KACC's public debt contain
restrictions on the ability of the Company's subsidiaries to transfer funds to
the Company in the form of cash dividends, loans or advances.

See Note 8 of Notes to Consolidated Financial Statements under the heading "Debt
Covenants and Restrictions" and the " Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources
- - Capital Structure" for additional information which are incorporated herein.

ITEM 6.       SELECTED FINANCIAL DATA

Selected financial data for the Company is incorporated herein by reference to
the table at page 1 of this Report, to the table at pages 14 - 15 of
Management's Discussion and Analysis of Financial Condition and Results of
Operations, to Note 1 of Notes to Consolidated Financial Statements, and to the
Five-Year Financial Data on pages 61 - 62 in this Report.

ITEM 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

Kaiser Aluminum Corporation ("Kaiser" or the "Company"), through its wholly
owned subsidiary, Kaiser Aluminum & Chemical Corporation ("KACC"), operates
in the following business segments: Bauxite and alumina, Primary aluminum,
Flat-rolled products, Engineered products and Commodities marketing. 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 table below provides
selected operational and financial information on a consolidated basis with
respect to the Company for the years ended December 31, 2000, 1999 and 1998. The
following data should be read in conjunction with the Company's consolidated
financial statements and the notes thereto, contained elsewhere herein. See Note
14 of Notes to Consolidated Financial Statements for further information
regarding segments. (All references to tons refer to metric tons of 2,204.6
pounds.)

                                                                                          Year Ended December 31,
                                                                                   ------------------------------------
(In millions of dollars, except shipments and prices)                                 2000         1999          1998
- -----------------------------------------------------------------------------------------------------------------------
Shipments: (000 tons)
   Alumina(1)
      Third Party                                                                   1,927.1       2,093.9       2,250.0
      Intersegment                                                                    751.9         757.3         750.7
                                                                                   ---------    ----------    ----------
        Total Alumina                                                               2,679.0       2,851.2       3,000.7
                                                                                   ---------    ----------    ----------
   Primary Aluminum(2)
      Third Party                                                                     345.5         295.6         263.2
      Intersegment                                                                    148.9         171.2         162.8
                                                                                   ---------    ----------    ----------
        Total Primary Aluminum                                                        494.4         466.8         426.0
                                                                                   ---------    ----------    ----------
   Flat-Rolled Products                                                               162.3         217.9         235.6
                                                                                   ---------    ----------    ----------
   Engineered Products                                                                164.6         171.1         169.4
                                                                                   ---------    ----------    ----------
Average Realized Third Party Sales Price:(3)(4)
   Alumina (per ton)                                                               $    209     $     176     $     184
   Primary Aluminum (per pound)                                                    $    .74     $     .66     $     .67
Net Sales:(3)
   Bauxite and Alumina(1)(4)
      Third Party (includes net sales of bauxite)                                  $  442.2     $   395.8     $   445.2
      Intersegment                                                                    148.3         129.0         135.8
                                                                                   ---------    ----------    ----------
        Total Bauxite & Alumina                                                   590.5         524.8         581.0
                                                                                   ---------    ----------    ----------
   Primary Aluminum(2)(4)
      Third Party                                                                     563.7         432.9         390.7
      Intersegment                                                                    242.3         240.6         233.5
                                                                                   ---------    ----------    ----------
        Total Primary Aluminum                                                        806.0         673.5         624.2
                                                                                   ---------    ----------    ----------
   Flat-Rolled Products                                                               521.0         591.3         732.7
   Engineered Products                                                                564.9         556.8         595.3
   Commodities Marketing(4)                                                           (25.4)         18.3          60.5
   Minority Interests                                                                 103.4          88.5          78.0
   Eliminations                                                                      (390.6)       (369.6)       (369.3)
                                                                                   ---------    ----------    ----------
        Total Net Sales                                                            $2,169.8     $ 2,083.6     $ 2,302.4
                                                                                   =========    ==========    ==========
Operating Income (Loss): (7)(8)
   Bauxite & Alumina (4)(5)                                                    $   57.2     $   (10.5)    $     5.5
   Primary Aluminum (4)(6)                                                            100.1          (4.8)         28.3
   Flat-Rolled Products                                                                16.6          17.1          86.8
   Engineered Products                                                                 34.1          38.6          51.5
   Commodities Marketing(4)                                                           (48.7)         21.3          98.1
   Micromill                                                                            (.6)        (11.6)        (18.4)
   Eliminations                                                                          .1           6.9           8.9
   Corporate and Other                                                                (61.4)        (61.8)        (65.1)
   Labor Settlement Charge                                                            (38.5)         -             -
   Other Non-Recurring Operating Items, Net                                            80.4         (24.1)       (105.0)
                                                                                   ---------    ----------    ----------
        Total Operating Income (Loss)                                              $  139.3     $   (28.9)    $    90.6
                                                                                   =========    ==========    ==========
Net Income (Loss)                                                                  $   16.8     $   (54.1)    $      .6
                                                                                   =========    ==========    ==========
Capital Expenditures                                                               $  296.5     $    68.4     $    77.6
                                                                                   =========    ==========    ==========

(1)   Net sales for 2000 and 1999 included approximately 267,000 tons and
      264,000 tons, respectively, of alumina purchased from third parties and
      resold to certain unaffiliated customers and 55,000 tons and 131,000 tons,
      respectively, of alumina purchased from third parties and transferred to
      the Company's primary aluminum business unit.
(2)   Net sales for 2000, 1999 and 1998 included approximately 206,500 tons,
      260,100 tons and 251,300 tons, respectively, of primary aluminum purchased
      from third parties to meet third-party and internal commitments.
(3)   Net sales for 1999 and 1998 for all segments have been restated to conform
      to a new accounting requirement which states that freight charges should
      be included in cost of products sold rather than netted against net sales
      as was the Company's prior policy. 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.
(4)   Average realized third-party sales prices, net sales and operating income
      (loss) for Bauxite and alumina and Primary aluminum segments for 1999 and
      1998 have been restated to reflect a change in the Company's segment
      reporting. The results of KACC's metal hedging activities are now set out
      separately in the Commodities marketing segment rather than being
      allocated between the two commodity business units.
(5)   Operating income (loss) for 2000 and 1999 included estimated business
      interruption insurance recoveries totaling $110.0 and $41.0, respectively
      Additionally, depreciation was suspended for the Gramercy facility for the
      period from July 1999 to December 2000 as a result of the July 1999
      incident. Depreciation expense for the Gramercy facility for the six
      months ended June 30, 1999, was approximately $6.0. See Note 2 of Notes to
      Consolidated Financial Statements for additional information.
(6)   Operating income (loss) for the year ended December 31, 1999, included
      potline preparation and restart costs of $12.8.
(7)   The allocation of the labor settlement charges to the Company's business
      units for the year ended December 31, 2000 is as follows: Bauxite and
      Alumina - $2.1, Primary aluminum - $15.9, Flat-rolled products - $18.2 and
      Engineered products - $2.3.
(8)   See Note 6 of Notes to Consolidated Financial Statements for a detailed
      summary of the components of non-recurring operating items, net (other
      than the labor settlement charges) and the business segment to which the
      items relate.

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 "Overview,"
"Results of Operations," "Liquidity and Capital Resources" and "Other Matters").
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. 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.

OVERVIEW

Market-related Factors. The Company's operating results are sensitive to changes
in the 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 KACC's hedging strategies. Primary aluminum prices have historically
been subject to significant cyclical price fluctuations. See Notes 1 and 13 of
Notes to Consolidated Financial Statements for a discussion of KACC'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 2000, the Average Midwest United States transaction price ("AMT price")
per pound of primary aluminum was $.75 per pound. During 1999, the AMT price
declined to a low of approximately $.57 per pound in February 1999 and then
began a steady increase ending 1999 at $.79 per pound. During 1998, the AMT
price experienced a steady decline during the year, beginning the year in the
$.70 to $.75 range and ending the year in the low $.60 range. At January 31,
2001, the AMT price was approximately $.81 per pound.

Liquidity/Cash Resources. KACC has significant near-term debt maturities. KACC's
ability to make payments on and refinance its debt depends on its ability to
generate cash in the future. In addition to being impacted by power sales and
normal operating items, the Company's and KACC's near-term liquidity and cash
flows will also be affected by the Gramercy incident, net payments for
asbestos-related liabilities and possible proceeds from asset dispositions. See
"Liquidity and Capital Resources - Financing Activities and Liquidity" for a
discussion of these matters.

Incident at Gramercy Facility. In July 1999, KACC's Gramercy, Louisiana alumina
refinery was extensively damaged by an explosion in the digestion area of the
plant. Construction on the damaged part of the facility began during the first
quarter of 2000. Initial production at the plant commenced during the middle of
December 2000. The plant is expected to increase production progressively to
approximately 75% of its newly rated estimated annual capacity of 1,250,000 tons
by the end of March 2001. At February 28, 2001, the plant was operating at 70%
of capacity. Based on current estimates, construction at the facility is
expected to be completed during the third quarter of 2001.

Through February 28, 2001, KACC had recorded $289.3 million of estimated
insurance recoveries related to the Gramercy incident and had collected $262.6
million of such amounts. An additional $7.0 million is expected in March 2001.
The remaining balance of approximately $20.0 million and any additional amounts
possibly due to KACC will likely not be recovered until KACC and the insurers
resolve certain outstanding issues. KACC and the insurers are currently
negotiating an arbitration agreement as a means of resolving their differences.
The Company anticipates that the remaining issues will not be resolved until
late 2001 or early 2002. KACC and the Company continue to believe that a minimum
of approximately $290.0 million of insurance recoveries are probable, that
additional amounts are owed to KACC by the insurers, and that the likelihood of
any refund by KACC of amounts previously received from the insurers is remote.

See Note 2 of Notes to Consolidated Financial Statements for a full discussion
regarding the incident at the Gramercy facility.

Labor Matters. As previously reported, prior to the settlement of the labor
dispute, KACC was operating five of its U.S. facilities with salaried employees
and other employees as a result of the September 1998 strike by the United
Steelworkers of America ("USWA") and the subsequent "lockout" by KACC in January
1999. The labor dispute was settled in September 2000. In September 2000, the
Company recorded a one-time pre-tax labor settlement charge of $38.5 million to
reflect the incremental, non-recurring impacts of the labor settlement,
including severance and other contractual obligations for non-returning workers.
See Note 5 of Notes to Consolidated Financial Statements for additional
discussions on the labor settlement.

Although the USWA dispute has been settled and the workers have returned to the
facilities, two allegations of unfair labor practices ("ULPs") in connection
with the USWA strike and subsequent lock-out by KACC remain to be settled. The
Company believes that the remaining charges made against KACC by the USWA are
without merit. See Note 12 of Notes to Consolidated Financial Statements for
additional discussion on the ULP charges.

Strategic Initiatives. KACC'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 by divesting of part or all of its interests in certain operating
assets.

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

KACC is considering the possible sale of part or all of its interests in certain
operating assets. The contemplated transactions are in various stages of
development. KACC expects that at least one operating asset will be sold. KACC
has multiple transactions under way. It is unlikely, however, that it would
consummate all of the transactions under consideration. Further, there can be no
assurance as to the likelihood, timing, or terms of such sales. The consummation
of any such sales would be dependent upon a number of factors, such as
negotiation of definitive documentation, due- diligence investigations, certain
lender approvals and/or anti-trust clearances. The Company would expect to use
the proceeds from any such sales for debt reduction, capital spending or some
combination thereof.

Another area of emphasis has been a continuing focus on managing the Company's
legacy liabilities. The Company believes that KACC has insurance coverage
available to recover a substantial portion of its asbestos-related costs and is
actively pursuing recoveries in this regard. For the period from inception
through December 31, 2000, the Company has paid approximately $220.5 million for
asbestos-related settlements and associated defense costs and has received
partial insurance reimbursements during this same period totaling $131.3
million. The timing and amount of future recoveries of asbestos-related claims
from insurance carriers remain a major priority of the Company, but will depend
on the pace of claims review and processing by such carriers and the resolution
of any disputes regarding coverage under the insurance policies.

Additional portfolio analysis and initiatives are continuing.

Pacific Northwest Power Sales and Operating Level. In response to the
unprecedented high market prices for power in the Pacific Northwest, the Company
temporarily curtailed the primary aluminum production at the Tacoma and Mead,
Washington, smelters during the second half of 2000 and sold a portion of the
power that it had under contract through September 30, 2001. As a result of the
curtailments, KACC avoided the need to purchase power on a variable market price
basis and will receive cash proceeds sufficient to more than offset the cash
impact of the potline curtailments over the period for which the power was sold.
KACC has made additional power sales in 2001.

During October 2000, KACC signed a new power contract with the Bonneville Power
Administration ("BPA") under which the BPA will provide KACC's operations in the
State of Washington with power during the period October 2001 through September
2006. The contract will provide sufficient power to operate KACC's Trentwood
facility as well as approximately 40% of the combined capacity of KACC's Mead
and Tacoma aluminum smelting operations. Power costs under the new contract are
expected to exceed the cost of power under KACC's current BPA contract by
between 20% to 60% and, perhaps, by as much as 100% in certain periods. There
are other terms of the new BPA contract which are also less favorable than the
current BPA contract. KACC does not have any remarketing rights under the new
BPA contract.

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

RESULTS OF OPERATIONS

Summary. The Company reported net income of $16.8 million, or $.21 of basic
income per common share, for 2000 compared to a net loss of $54.1 million, or
$.68 of basic loss per common share, for 1999 and net income of $.6 million, or
$.01 of basic income per common share, for 1998. However, results for 2000, 1999
and 1998 included material non- recurring gains and losses as summarized below:


                                                                                           Year Ended December 31,
                                                                                  ------------------------------------------
                                                                                      2000            1999            1998
                                                                                  ----------      ----------      ----------
As reported, income (loss) per common share                                       $    .21        $   (.68)       $    .01
Less material non-recurring (gains) losses:
   Labor settlement charge in 2000; strike-related costs in 1998                       .30            -                .50
   Asbestos-related charges                                                            .33             .44             .11
   Impairment loss - U.S. smelters in 2000; Micromill in 1999 and 1998                 .25             .16             .38
   Net gains from power sales                                                        (1.22)           -               -
   Operating profit foregone as a result of power sales                                .20            -               -
   Gains - real estate transactions in 2000; AKW L.P. interests in 1999               (.30)           (.42)           -
   Other non-recurring operating charges                                               .21            -               -
   Gramercy-related items:
      Gain on involuntary conversion                                                  -               (.71)           -
      Incremental maintenance spending                                                 .09            -               -
      Charge for insurance deductibles                                                -                .04            -
      LIFO inventory charge                                                            .05            -               -
   Mark-to-market (gains) losses                                                      (.08)            .27            -
                                                                                  ----------      ----------      ----------
                                                                                  $    .04        $   (.90)       $   1.00
                                                                                  ==========      ==========      ==========

Net sales in 2000 totaled $2,169.8 million compared to $2,083.6 million in 1999
and $2,302.4 million in 1998.

2000 AS COMPARED TO 1999

Bauxite and Alumina. Third party net sales of alumina were up 12% in 2000 as
compared to 1999 as a 19% increase in third party average realized price was
partially offset by an 8% decrease in third party shipments. The increase in
average realized price was because the sales prices for alumina under the
Company's third-party alumina sales contracts are linked to primary aluminum
prices and primary aluminum prices increased year over year. The decrease in
year-over- year 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 267,000 tons of alumina purchased by KACC in 2000 from
third parties to fulfill third party sales contracts.

Intersegment net sales for 2000 increased 15% as compared to 1999. The increase
was primarily due to a 16% increase in the intersegment average realized price
resulting from increases in primary aluminum prices from period to period as
intersegment transfers are made on the basis of primary aluminum market prices
on a lagged basis of one month. Intersegment shipments were essentially flat.
The favorable impact on intersegment alumina shipments of operating more
potlines at the Company's smelters during the first half of 2000 as compared to
the same period in 1999 was offset by the unfavorable impact of the potline
curtailments at the Company's Washington smelters in the last half of 2000.
Intersegment shipments for 2000 included approximately 55,000 tons of alumina
purchased by KACC from third-parties and transferred to the Primary aluminum
business unit.

Segment operating income (before non-recurring items) for 2000 was up
significantly as compared to 1999 primarily as a result of the factors discussed
above. Segment operating income for 2000 excludes non-recurring labor settlement
charges of $2.1 million and three Gramercy-related items; a $7.0 million
non-cash LIFO inventory charge, incremental maintenance spending of $11.5
million and an $.8 million non-cash restructuring charge. Segment operating
income for 1999 excludes the segment's allocated share of the expense of
insurance deductibles related to the Gramercy incident of $4.0 million.

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

Primary Aluminum. Third party net sales of primary aluminum were up 30% for 2000
as compared to 1999 as a result of a 17% increase in third party shipments and a
12% 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") throughout 2000
and the Washington smelters (during the first six months of 2000). These
shipment increases were offset, in part, by curtailments of the potlines at the
Washington smelters during the second half of 2000, net of approximately 206,500
tons of primary aluminum purchased from third-parties to meet third-party and
internal commitments. The increase in the average realized prices reflects the
14% increase in primary aluminum market prices. Intersegment net sales for 2000
were up modestly when compared to 1999. A 16% increase in intersegment average
realized prices was offset by a 13% decrease in intersegment shipments. The
increase in the intersegment average realized price was due to higher market
prices for primary aluminum as intersegment transfers are made on the basis of
market prices. The decrease in shipments was primarily due to the potline
curtailments at the Washington smelters, the reduced requirements of the
Flat-rolled products segment due to the can body stock exit and the reduced
requirements of the Engineered products segment due to the softening of the
ground transportation and distribution markets.

Segment operating income (before non-recurring items) for 2000 was up
significantly from 1999. The primary reason for the increase was the
improvements in average realized prices and net shipments discussed above.
However, segment operating income for 2000 was adversely affected by increased
alumina prices, higher electric power costs and reduced profitability resulting
from metal purchased and resold to the Flat-rolled products and Engineered
products business units. The increase in alumina costs is the result of higher
primary aluminum prices in 2000 because transfers of alumina from KACC's alumina
business unit are made on a metal-linked basis. Power costs have generally
increased, even after excluding the higher than normal power costs experienced
by the Company in the Pacific Northwest. As previously reported, new agreements
entered into in both Ghana and Wales provide for increased power stability but
at increased costs. The reduced profitability on sales to the Flat-rolled
products and Engineered products segments is due to the lack of a profit margin
on metal that was purchased and resold at cost to the segments versus the profit
margin that would have existed had the metal been produced.

Segment operating income for 2000, discussed above, excludes non-recurring net
power sales gains of $159.5 million. Segment operating income for 2000 also
excludes a non-cash smelter impairment charge of $33.0 million, the segment's
share of the non-recurring labor settlement charge of $15.9 million and costs
related to staff reduction initiatives of $3.1 million. Operating income in 1999
included costs of approximately $12.8 million associated with preparing and
restarting potlines at Valco and the Washington smelters.

Flat-Rolled Products. Net sales of flat-rolled products decreased by 12% in 2000
as compared to 1999 as a 26% decrease in shipments was only partially offset by
a 14% 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 year over year improvement in shipments of heat-treat
products. The increase in average realized prices primarily reflects the change
in product mix (resulting from the can body stock exit) as well as the pass
through to customers of increased market prices for primary aluminum.

Segment operating income (before non-recurring items) for 2000 was essentially
flat when compared to 1999 as the increase in price and volume for heat-treat
products offset the impacts of the can body stock exit. Segment operating income
for 2000, discussed above, excludes the segment's share of the non-recurring
labor settlement charge of $18.2 million. Segment operating income also excludes
a $7.5 million non-cash LIFO inventory charge and $5.1 million of non-cash
impairment charges associated with KACC's exit from the can body stock product
line.

Results for 2000 for the Flat-rolled products segment were also adversely
affected late in the year by the Washington smelter curtailments as the business
unit no longer had a supply of hot metal. While the impact of this change was
modest in 2000, the business unit will be adversely affected by this situation
in 2001. The amount of the impact will depend on the cost of acquiring the
necessary metal units and the energy costs incurred to melt the purchased metal.

Engineered Products. Net sales of engineered products for 2000 were essentially
flat as compared to 1999 as a 5% increase in average realized prices was offset
by a 4% decrease in product shipments. The increase in average realized prices
reflects increased prices for soft alloy extrusions, offset, in part, by a shift
in product mix. The decrease in product shipments in 2000 over 1999 reflects a
substantial weakening in ground transportation and distribution markets in the
last half of 2000.

The changes in segment operating income (before non-recurring items) for 2000 as
compared to 1999 were primarily attributable to increased energy costs. Segment
operating income for 2000 excludes a non-recurring non-cash impairment charge
associated with product line exit of $5.6 million and labor settlement charges
of $2.3 million. Segment operating income for 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.

Commodities Marketing. Commodities marketing includes the results of KACC's
aluminum hedging activities. Its hedging activities include: (1) metal hedging
on behalf of the Bauxite and alumina and Primary aluminum business segments with
third-party brokers (other than mark-to-market charges on certain non-qualifying
hedges which are reflected in Other income (expense) - see Notes 1 and 13 of
Notes to Consolidated Financial Statements) and (2) internal hedging with
Flat-rolled products and Engineered products business segments so as to
eliminate the commodity price risk on the underlying aluminum whenever these
segments enter into a fixed price contract with a third-party customer.

Net sales for this segment represent net settlements with third-party brokers
for derivative positions. Operating income represents the combined effect of
such net settlements, any net premium costs associated with the purchase or sale
of options, as well as net results of internal hedging activities with KACC's
fabricated products segments. The decrease in net sales as well as a decrease in
operating income in 2000 as compared to 1999 results from the 2000 hedging
positions having lower ceilings than the positions in 1999. This is primarily
the result of the timing of when the hedging position activities were completed.

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

Corporate and Other. Corporate operating expenses (excluding non-recurring
items) represent corporate general and administrative expenses which are not
allocated to the Company's business segments. Corporate operating results for
2000 exclude costs related to staff reduction and efficiency initiatives of $5.5
million. Corporate operating results for 1999 exclude the expense of insurance
deductibles related to the Gramercy incident allocated to the Corporate segment
of $1.0 million.

1999 AS COMPARED TO 1998

Bauxite and Alumina. Third party net sales were down 11% in 1999 as compared to
1998 as a result of a 4% decline in third party average realized prices and a 7%
decrease in third party alumina shipments. The decline in the average realized
prices in 1999 as compared to 1998 was primarily attributable to lower
realizations under KACC's primary aluminum linked alumina sales contracts caused
by lower primary aluminum market prices. The decrease in year-over- year
shipments was primarily the net effect of the Gramercy incident after
considering the 264,000 tons of alumina purchased by KACC from third parties to
fulfill third party sales contract.

Intersegment net sales for 1999 declined 5% as compared to 1998. The decline was
primarily due to a 6% decline in the intersegment average realized price, offset
in part by a 1% increase in intersegment shipments, resulting from potline
restarts at Valco and at the Company's Washington smelters. Intersegment net
sales include approximately 131,000 tons of alumina purchased from third-parties
and transferred to the primary aluminum business unit.

Segment operating income (before non-recurring items) for 1999 was down as
compared to 1998 primarily as a result of the price and volume factors discussed
above. Segment operating income for 1999 was favorably impacted by the fact that
depreciation on the Gramercy facility was suspended in July 1999.

Segment operating income for 1999, discussed above, excludes the segment's
allocated share of the expense of insurance deductibles related to the Gramercy
incident of $4.0 million. Segment operating income for 1998 excludes the adverse
impact of approximately $11.0 million of incremental strike-related costs.

Primary Aluminum. Third party net sales of primary aluminum were up 11% as
compared to 1998 as a result of a 12% increase in third party shipments offset
by a 1% decrease in the average realized third party sales prices. The increase
in shipments was primarily due to the favorable impact of Valco operating three
potlines in 1999 as compared to one potline in 1998.

Intersegment net sales for 1999 were up 3% as compared to 1998. Intersegment
shipments increased 5% due to the timing of shipments to the Company's
fabricated business units while intersegment average realized prices were down
2%.

Segment operating income (before non-recurring items) for 1999 was down compared
to 1998. The most significant component of this decline was the reduction in the
average realized prices discussed above. Results for 1999 were also adversely
impacted by costs of approximately $12.8 million associated with preparing and
restarting potlines at Valco and the Washington smelters. The favorable impact
of Valco operating at a higher rate in 1999 (as compared to 1998) was
substantially offset by the fact that Valco earned mitigating compensation of
approximately $29.0 million in 1998 for two of its curtailed potlines.

Segment operating income for 1998, discussed above, excludes the adverse impact
of approximately $29.0 of incremental strike-related costs.

Flat-Rolled Products. Net sales of flat-rolled products for 1999 declined by 19%
compared to 1998 as a result of a 13% decline in average realized prices and an
8% decline in product shipments. The decline in average realized prices resulted
primarily from a shift in product mix (from aerospace products, which have a
higher price and operating margin, to other products) and a reduction in prices
resulting from reduced demand for heat treat products. The reduction in
shipments was primarily due to reduced demand in 1999 for aerospace heat-treat
products offset, in small part, by increased shipments of general engineered
products.

The decline in 1999 prices and shipments as compared to 1998 was responsible for
the decline in segment operating income for 1999. Segment operating income for
1998 excluded the adverse impact of approximately $16.0 million of incremental
strike-related costs.

Engineered Products. Net sales of engineered products for 1999 decreased 7%
compared to 1998 primarily due to an 8% decline in average realized prices.
Product shipments were essentially flat. The decline in the average sales
realized prices in 1999 was attributable to a change in product mix (higher
ground transportation products offset by lower aerospace shipments). While there
was a strong increase in 1999 in the demand for ground transportation products
it was offset by a reduced demand for aerospace products.

Segment operating income for 1999 decreased compared to 1998 as a result of the
factors discussed above as well as the reduced equity in earnings from AKW
(which partnership interests were sold in April 1999). Segment operating income
for 1998 excluded the adverse impact of approximately $4.0 million of
incremental strike-related costs.

Commodities Marketing. Net sales for this segment represent net settlements with
third-party brokers for derivative positions. Operating income represents the
combined effect of such net settlements, any net premium costs associated with
the purchase or sale of options, as well as net results of internal hedging
activities with KACC's fabricated products segments. The decrease in net sales
as well as a decrease in operating income in 1999 as compared to 1998 results
primarily from the 1999 hedging positions having lower floors than the positions
in 1998. This is primarily the result of the timing of when the hedging position
activities were completed.

Eliminations. Eliminations of intersegment profits 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 (before non-recurring items)
represent corporate general and administrative expenses which are not allocated
to the Company's business segments. Corporate operating expenses for 1999 were
lower than 1998 primarily due to reduced incentive compensation expense
resulting from the decline in operating results. Corporate operating results for
1999 exclude the expense of insurance deductibles related to the Gramercy
incident allocated to the Corporate segment of $1.0 million.

LIQUIDITY AND CAPITAL RESOURCES

See Note 8 of Notes to Consolidated Financial Statements for a listing of the
Company's indebtedness and information concerning certain restrictive debt
covenants. See Note 12 of Notes to Consolidated Financial Statements for a
discussion of the material commitments and contingencies affecting the Company's
liquidity and capital resources.

Operating Activities. In 2000, operating activities provided $84.6 million of
cash. This amount compares with 1999 when operating activities used cash of
$89.3 million and 1998 when operating activities provided cash of $170.7
million. The increase in cash flows from operating activities between 2000 and
1999 resulted primarily from the impact of the improved 2000 operating results,
driven primarily by the net proceeds received from power sales of approximately
$119.8 million, and a decline in inventories of approximately $125.8 million,
offset in part by an increase in receivables of approximately $168.8 million.
The decrease in inventories was primarily due to improved inventory management
and the exit from the can body product line at the Flat-rolled products business
unit. The increase in receivables was primarily due to power sale proceeds that
were received in the first quarter of 2001 and Gramercy-related items. The
decrease in cash flows from operating activities between 1999 and 1998 was due
primarily to the impact of 1999 results, excluding non-cash charges, and an
increased investment in working capital (excluding cash).

Investing Activities. Total consolidated capital expenditures were $296.5, $68.4
and $77.6 million in 2000, 1999 and 1998, respectively (of which $5.4, $4.8 and
$7.2 million were funded by the minority partners in certain foreign joint
ventures). The $296.5 million capital expenditures in 2000 included $239.1
million spent with respect to rebuilding the Gramercy facility and $13.3 million
spent with respect to the purchase of the non-working capital assets of the
Chandler, Arizona drawn tube aluminum fabricating operation. The remaining
capital expenditures in 2000 and the capital expenditures in 1999 and 1998 were
made primarily to improve production efficiency, reduce operating costs and
expand capacity at existing facilities. Total consolidated capital expenditures,
excluding the expenditures in 2001 to finish rebuilding the Gramercy, Louisiana
facility, are currently expected to be between $60.0 and $80.0 million per year
in each of 2001 and 2002 (of which approximately 15% 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, KACC's
ability to assure future cash flows through hedging or other means, the
Company's financial position and other factors.

Financing Activities and Liquidity: Short-Term. KACC uses its credit agreement,
as amended (the "Credit Agreement") to provide short-term liquidity requirements
and for letters of credit to support operations. During 2000, month-end
borrowing amounts outstanding under the Credit Agreement have been as high as
approximately $53.4 million, which occurred in August 2000, primarily as a
result of costs incurred and capital spending related to the Gramercy rebuild,
net of insurance reimbursements. The average amount of borrowings outstanding
under the Credit Agreement during 2000 was approximately $25.6 million. The
average interest rate on loans outstanding under the Credit Agreement during
2000, was approximately 10.3% per annum. Outstanding letters of credit monthly
balances have primarily been in the range of $55.0 to $65.0 million. As of
February 28, 2001, there were $94.0 million of borrowings outstanding under the
Credit Agreement and remaining availability of approximately $120.0 million.
However, proceeds of approximately $130.0 million related to 2001 power sales
are expected to be received at or near March 30, 2001, and an additional $130.0
million of power proceeds will be received periodically through October 2001
with respect to other power sales made during the first quarter of 2001.

The Credit Agreement expires in August 2001. It is the Company's and KACC's
intention to extend or replace the Credit Agreement prior to its expiration.
However, in order for the Credit Agreement to be extended, on a short-term
basis, beyond August 2001, KACC will have to have a plan to mitigate the $225.0
million of 97/8% Senior Notes, due February 2002 (the "97/8% Senior Notes"). For
the Credit Agreement to be extended past February 2003, both the 97/8% Senior
Notes and the $400.0 million of 12 3/4% Senior Subordinated Notes, due February
2003, will have to be retired and/or refinanced. As of February 28, 2001, KACC
had received approval from the Credit Agreement lenders to purchase up to $50.0
million of the 97/8% Senior Notes. As of February 28, 2001, KACC had purchased
approximately $1.0 million of 97/8% Senior Notes.

In addition to being impacted by power sales and normal operating variables, the
Company's and KACC's near-term liquidity will also, as more fully discussed
below, be affected by, among other things, three significant items: the Gramercy
incident, the amount of net payments for asbestos liabilities and possible
proceeds from asset dispositions.

KACC will continue to incur business interruption costs and capital spending
until all construction activity at the Gramercy facility is completed and full
production is restored. As more fully discussed in Note 2 of Notes to
Consolidated Financial Statements, unless KACC is successful in its arbitration
process against its insurers, it will have to fund all of the remaining
Gramercy-related capital expenditures as well as any incremental costs or losses
incurred at Gramercy. It is believed that such amounts will total between $100.0
and $150.0 million depending on, among other things, the ultimate cost of the
rebuild, the elapsed time of the rebuild and the amount of start-up
costs/inefficiencies. The Company now believes that the total cost of the
rebuild will be between $300.0 and $325.0 million. As previously announced,
however, the plant will include several additional enhancements from its
original design including the installation of additional safety features in the
digestion unit and enhancements to increase the annual production capacity of
the plant from 1,125,000 tons to 1,250,000 tons on an extremely favorable
cost-per-ton basis.

During 2000, KACC paid $99.5 million of asbestos-related settlement and defense
costs and received insurance reimbursement of $62.8 million for asbestos-related
matters. KACC's 2001 and 2002 cash payments, prior to insurance recoveries, for
asbestos-related costs are estimated to be between $110.0 million and $135.0
million per year. The Company believes that KACC will recover a substantial
portion of asbestos payments from insurance. However, insurance reimbursements
have historically lagged KACC's payments. Delays in receiving future insurance
repayments would have an adverse impact on KACC's liquidity. During 2000, KACC
filed suit against a group of its insurers, after negotiations with certain of
the insurers regarding an agreement covering both reimbursement amounts and the
timing of reimbursement payments were unsuccessful. The litigation is intended,
among other things, to: (1) ensure that the insurers provide KACC with timely
and appropriate reimbursement payments for asbestos-related settlements and
related legal costs incurred; and (2) to resolve certain issues between the
parties with respect to how specific provisions of the applicable insurance
policies are to be applied. Given the significance of expected asbestos-related
payments in 2001 and 2002 based on settlement agreements in place at December
31, 2000, the receipt of timely and appropriate reimbursements from such
insurers is critical to KACC's liquidity. The court is not expected to try the
case until late 2001 or 2002. KACC is continuing to receive cash payments from
the insurers.

KACC is considering the possible sale of part or all of its interests in certain
operating assets. The contemplated transactions are in various stages of
development. KACC expects that at least one operating asset will be sold. KACC
has multiple transactions under way. It is unlikely, however, that it will
consummate all of the transactions under consideration. Further, there can be no
assurance as to the likelihood, timing or terms of such sales. The Company would
expect to use the proceeds from any such sales for debt reduction, capital
spending or a combination thereof.

Management believes that the Company's existing cash resources, together with
cash flows from operations, power sales and anticipated asset dispositions, as
well as borrowings under the Credit Agreement, will be sufficient to satisfy its
working capital and capital expenditure requirements for the next year. However,
no assurance can be given that existing cash sources will be sufficient to meet
the Company's short-term liquidity requirements or that additional sources of
cash will not be required.

Long-Term. As of December 31, 2000, the Company's total consolidated
indebtedness was $989.4 million, including $30.4 million outstanding under the
Credit Agreement, which amount is included in current liabilities. KACC'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 KACC's control. 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 KACC's and the Company's working capital, financing and capital
expenditure requirements. However, no assurance can be given that KACC will be
able to refinance its debt on acceptable terms.

Capital Structure. MAXXAM Inc. ("MAXXAM") and one of its wholly owned
subsidiaries collectively own approximately 63% of the Company's Common Stock,
with the remaining approximately 37% of the Company's Common Stock being
publicly held. Certain of the shares of the Company's Common Stock beneficially
owned by MAXXAM are subject to certain pledge agreements. See Note 11 of Notes
to Consolidated Financial Statements for a further description of the pledge
agreements.

The Company has an effective "shelf" registration statement covering the
offering from time to time of up to $150.0 million of equity securities. Any
such offering will only be made by means of a prospectus. The Company also has
an effective "shelf" registration statement covering the offering of up to
10,000,000 shares of the Company's Common Stock that are owned by MAXXAM. The
Company will not receive any of the net proceeds from any transaction initiated
by MAXXAM pursuant to this registration statement.

Commitments and Contingencies. The Company and KACC are subject to a number of
environmental laws, to fines or penalties assessed for alleged breaches of the
environmental laws, and to claims and litigation based upon such laws. Based on
the Company's evaluation of these and other environmental matters, the Company
has established environmental accruals of $46.1 million at December 31, 2000.
However, the Company believes that it is reasonably possible that changes in
various factors could cause costs associated with these environmental matters to
exceed current accruals by amounts that could range, in the aggregate, up to an
estimated $35.0 million.

KACC is also a defendant in a number of asbestos-related lawsuits that generally
relate to products KACC has not sold for more than 20 years. Based on past
experience and reasonably anticipated future activity, the Company has
established a $492.4 million accrual at December 31, 2000, for estimated
asbestos-related costs for claims filed and estimated to be filed through 2010,
before consideration of insurance recoveries. However, the Company believes that
substantial recoveries from insurance carriers are probable. The Company reached
this conclusion based on prior insurance-related recoveries in respect of
asbestos-related claims, existing insurance policies and the advice of outside
counsel with respect to applicable insurance coverage law relating to the terms
and conditions of these policies. Accordingly, the Company has recorded an
estimated aggregate insurance recovery of $406.3 million (determined on the same
basis as the asbestos-related cost accrual) at December 31, 2000. Although the
Company has settled asbestos- related coverage matters with certain of its
insurance carriers, other carriers have not yet agreed to settlements and
disputes with certain carriers exist. The timing and amount of future recoveries
from these 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 that may arise.

In connection with the USWA strike and subsequent lock-out by KACC which was
settled in September 2000, certain allegations of unfair labor practices
("ULPs") have been filed with the National Labor Relations Board ("NLRB")by the
USWA. KACC believes that all such allegations are without merit. Twenty-two of
twenty-four allegations of ULPs previously brought against it by the USWA have
been dismissed. A trial before an administrative law judge for the two remaining
allegations commenced in November 2000 and is continuing. The Company is unable
to estimate when the trial will be completed. Any outcome from the trial would
be subject to additional appeals by the general counsel of the NLRB, the USWA or
KACC. This process could take months or years. If these proceedings eventually
resulted in a final ruling against KACC with respect to either allegation, it
could be obligated to provide back pay to USWA members at the five plants and
such amount could be significant.

While uncertainties are inherent in the final outcome of these matters and it is
presently impossible to determine the actual costs that ultimately may be
incurred and insurance recoveries that ultimately may be received, management
currently believes that the resolution of these uncertainties and the incurrence
of related costs, net of any related insurance recoveries, should not have a
material adverse effect on the Company's consolidated financial position or
liquidity. However, amounts paid, if any, in satisfaction of these matters could
be significant to the results of the period in which they are recorded. See Note
12 of Notes to Consolidated Financial Statements for a more detailed discussion
of these contingencies and the factors affecting management's beliefs.

OTHER MATTERS

Income Tax Matters. The Company's net deferred income tax assets as of December
31, 2000, were $464.2 million, net of valuation allowances of $122.3 million.
The Company believes a long-term view of profitability is appropriate and has
concluded that these net deferred income tax assets will more likely than not be
realized. See Note 9 of Notes to Consolidated Financial Statements for a
discussion of these and other income tax matters.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This section contains forward-looking statements that involve risk and
uncertainties. Actual results could differ materially from those projected in
these forward-looking statements. The following disclosures are before
consideration of any impacts resulting from the application of Statement of
Financial Accounting Standards ("SFAS") No. 133 beginning January 1, 2001. See
Note 1 of Notes to Consolidated Financial Statements for a discussion of the
impacts of SFAS No. 133.

The Company's operating results 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. As discussed
more fully in Notes 1 and 13 of Notes to Consolidated Financial Statements, KACC
utilizes hedging transactions to lock- in a specified price or range of prices
for certain products which it sells or consumes in its production process and to
mitigate KACC's exposure to changes in foreign currency exchange rates. The
following sets forth the impact on future earnings of adverse market changes
related to KACC's hedging positions with respect to commodity, foreign exchange
and energy contracts described more fully in Note 13 of Notes to Consolidated
Financial Statements.

Alumina and Primary Aluminum. Alumina and primary aluminum production in excess
of internal requirements is sold in domestic and international markets, exposing
the Company to commodity price opportunities and risks. KACC's hedging
transactions are intended to provide price risk management in respect of the net
exposure of earnings resulting from (i) anticipated sales of alumina, primary
aluminum and fabricated aluminum products, less (ii) expected purchases of
certain items, such as aluminum scrap, rolling ingot, and bauxite, whose prices
fluctuate with the price of primary aluminum. On average, before consideration
of hedging activities, any fixed price contracts with fabricated aluminum
products customers, variations in production and shipment levels, and timing
issues related to price changes, the Company estimates that each $.01 increase
(decrease) in the market price per price-equivalent pound of primary aluminum
increases (decreases) the Company's annual pre-tax earnings by approximately
$10.0 - $15.0 million, based on recent fluctuations in operating levels.

Based on the average December 2000 London Metal Exchange ("LME") cash price for
primary aluminum of approximately $.71 per pound, the Company estimates that
there would be no material net aggregate pre-tax impact on operating income from
its hedging positions and fixed price customer contracts during the period 2001
through 2003. The Company estimates that a hypothetical $.10 increase from the
above stated December 2000 price would result in a net aggregate pre-tax
decrease in operating income of approximately $75.0 million being realized
during the period 2001 through 2003 from KACC's hedging positions and fixed
price customer contracts. Conversely, the Company estimates that a hypothetical
$.10 decrease from the above stated December 2000 price level would result in an
aggregate pre-tax increase in operating income of approximately $130.0 million
being realized during the period 2001 through 2003 from KACC's hedging positions
and fixed price customer contracts. Both of the foregoing hypothetical amounts
are versus what the Company's results would have been without the derivative
commodity contracts and fixed price customer contracts discussed above. It
should be noted, however, that, since the hedging positions and fixed price
customer contracts lock-in a specified price or range of prices, increases or
decreases in earnings attributable to KACC's hedging positions or fixed price
customer contracts are significantly offset by a decrease or increase in the
proceeds to be realized on the underlying physical transactions.

As stated in Note 13 of Notes to the Consolidated Financial Statements, KACC has
certain hedging positions which do not qualify for treatment as a "hedge" under
current accounting guidelines and thus must be marked-to-market each period.
Fluctuations in forward market prices for primary aluminum would likely result
in additional earnings volatility as a result of these positions. The Company
estimates that a hypothetical $.10 change in spot market prices from the
December 31, 2000, LME cash price of $.71 per pound would, depending on the
shape of the forward curve, result in additional aggregate mark-to-market
impacts of between $10.0-$30.0 million during any period through 2003.

In addition to having an impact on the Company's earnings, a hypothetical
$.10-per-pound change in primary aluminum prices would also impact the Company's
cash flows and liquidity through changes in possible margin advance
requirements. At December 31, 2000, KACC had made margin advances of $5.1
million and had posted letters of credit totaling $5.0 million in lieu of paying
margin advances. Increases in primary aluminum prices subsequent to December 31,
2000, could result in KACC having to make additional margin advances or post
additional letters of credit and such amounts could be significant. If primary
aluminum prices increased by $.10 per pound (from the year-end 2000 price) by
March 31, 2001 and the forward curve were as described above, it is estimated
that KACC could be required to make additional margin advances in the range of
$50.0 to $100.0 million.

Foreign Currency. KACC enters into forward exchange contracts to hedge material
cash commitments for foreign currencies. KACC's primary foreign exchange
exposure is related to KACC's Australian Dollar (A$) commitments in respect of
activities associated with its 28.3%-owned affiliate, Queensland Alumina
Limited. The Company estimates that, before consideration of any hedging
activities, a US $0.01 increase (decrease) in the value of the A$ results in an
approximate $2 million (decrease) increase in the Company's annual pre-tax
operating income.

KACC's foreign currency hedges would have no net aggregate pre-tax impact on the
Company's operating results for the period 2001 through 2005 at the December 31,
2000 US$ to A$ exchange rate of $.55. The Company estimates that a hypothetical
10% reduction in the A$ exchange rate would result in the Company recognizing a
net aggregate pre-tax cost of approximately $10.0 million for the period 2001
through 2005 from KACC's foreign currency hedging positions. Conversely, the
Company estimates that a hypothetical 10% increase in the A$ exchange rate (from
$.55) would result in the Company realizing a net pre-tax aggregate benefit of
approximately $20.0 million. These hypothetical impacts are versus what the
Company's results would have been without the Company's derivative foreign
currency contracts. It should be noted, however, that, since the hedging
positions lock-in specified rates, increases or decreases in earnings
attributable to currency hedging instruments would be offset by a corresponding
decrease or increase in the value of the hedged commitments.

Energy. KACC is exposed to energy price risk from fluctuating prices for fuel
oil, diesel oil and natural gas consumed in the production process. The Company
estimates that each $1.00 change in natural gas prices (per mcf) impacts the
Company's pre-tax operating results by approximately $20.0 million. Further, the
Company estimates that each $1.00 change in fuel oil prices (per barrel) impacts
the Company's pre-tax operating results by approximately $3.0 million.

KACC 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 December 31, 2000, KACC held option and swap contracts
hedging a substantial majority of its first quarter 2001 natural gas
requirements. The Company expects to realize a pre- tax benefit of approximately
$10.0 million in the first quarter of 2001 associated with these hedging
positions. However, it should be noted that these benefits will be offset by the
higher than normal gas prices on the physical gas deliveries received during the
first quarter of 2001.

ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   Report of Independent Public Accountants

   Consolidated Balance Sheets

   Statements of Consolidated Income (Loss)

   Statements of Consolidated Stockholders' Equity and Comprehensive Income (Loss)

   Statements of Consolidated Cash Flows

   Notes to Consolidated Financial Statements

   Quarterly Financial Data (Unaudited)

   Five-Year Financial Data


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------

To the Stockholders and the Board of Directors of Kaiser Aluminum Corporation:

We have audited the accompanying consolidated balance sheets of Kaiser Aluminum
Corporation (a Delaware corporation) and subsidiaries as of December 31, 2000
and 1999, and the related statements of consolidated income (loss),
stockholders' equity and comprehensive income (loss) and cash flows for each of
the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kaiser Aluminum Corporation and
subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.



ARTHUR ANDERSEN LLP




Houston, Texas
March 27, 2001

CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------

                                                                                        December 31,
                                                                                 -------------------------
(In millions of dollars, except share amounts)                                        2000         1999
- ----------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
   Cash and cash equivalents                                                     $     23.4    $     21.2
   Receivables:
     Trade, less allowance for doubtful receivables of $5.8 and $5.9                  188.7         154.1
     Other                                                                            241.1         106.9
   Inventories                                                                        396.2         546.1
   Prepaid expenses and other current assets                                          162.7         145.6
                                                                                 -----------   -----------
     Total current assets                                                           1,012.1         973.9

Investments in and advances to unconsolidated affiliates                               77.8          96.9
Property, plant, and equipment - net                                                1,176.1       1,053.7
Deferred income taxes                                                                 454.2         440.0
Other assets                                                                          622.9         634.3
                                                                                 -----------   -----------
     Total                                                                       $  3,343.1    $  3,198.8
                                                                                 ===========   ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                              $    236.8    $    231.7
   Accrued interest                                                                    37.5          37.7
   Accrued salaries, wages, and related expenses                                      110.3          62.1
   Accrued postretirement medical benefit obligation - current portion                 58.0          51.5
   Other accrued liabilities                                                          288.9         168.8
   Payable to affiliates                                                               78.3          85.8
   Long-term debt - current portion                                                    31.6            .3
                                                                                 -----------   -----------

     Total current liabilities                                                        841.4         637.9

Long-term liabilities                                                                 703.7         727.1
Accrued postretirement medical benefit obligation                                     656.9         678.3
Long-term debt                                                                        957.8         972.5
Minority interests                                                                    101.1         117.7
Commitments and contingencies
Stockholders' equity:
   Common stock, par value $.01, authorized 125,000,000 shares; issued
     and outstanding 79,599,557 and 79,405,333 shares                                    .8            .8
   Additional capital                                                                 537.5         536.8
   Accumulated deficit                                                               (454.3)       (471.1)
   Accumulated other comprehensive income (loss)                                       (1.8)         (1.2)
                                                                                 -----------   -----------
     Total stockholders' equity                                                        82.2          65.3
                                                                                 -----------   -----------
     Total                                                                       $  3,343.1    $  3,198.8
                                                                                 ===========   ===========


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

STATEMENTS OF CONSOLIDATED INCOME (LOSS)
- --------------------------------------------------------------------------------


                                                                               Year Ended December 31,
                                                                       ---------------------------------------
(In millions of dollars, except share amounts)                              2000          1999          1998
- --------------------------------------------------------------------------------------------------------------
Net sales                                                              $  2,169.8    $  2,083.6    $  2,302.4
                                                                       -----------   -----------   -----------
Costs and expenses:
   Cost of products sold                                                  1,891.4       1,893.5       1,892.2
   Depreciation and amortization                                             76.9          89.5          99.1
   Selling, administrative, research and development, and general           104.1         105.4         115.5
   Labor settlement charge                                                   38.5           -             -
   Other non-recurring operating items, net                                 (80.4)         24.1         105.0
                                                                       -----------   -----------   -----------
     Total costs and expenses                                             2,030.5       2,112.5       2,211.8
                                                                       -----------   -----------   -----------

Operating income (loss)                                                     139.3         (28.9)         90.6

Other income (expense):
   Interest expense                                                        (109.6)       (110.1)       (110.0)
   Gain on involuntary conversion at Gramercy facility                      -              85.0           -
   Other - net                                                               (4.3)        (35.9)          3.5
                                                                       -----------   -----------   -----------

Income (loss) before income taxes and minority interests                     25.4         (89.9)        (15.9)

(Provision) benefit for income taxes                                        (11.6)         32.7         16.4

Minority interests                                                            3.0           3.1            .1
                                                                       -----------   -----------   -----------

Net income (loss)                                                      $     16.8    $    (54.1)   $       .6
                                                                       ===========   ===========   ===========
Earnings (loss) per share:
   Basic/Diluted                                                       $      .21    $     (.68)   $      .01
                                                                       ===========   ===========   ===========
Weighted average shares outstanding (000):
   Basic                                                                   79,520        79,336        79,115
                                                                       ===========   ===========   ===========

   Diluted                                                                 79,523        79,336        79,156
                                                                       ===========   ===========   ===========


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


STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
- --------------------------------------------------------------------------------

(In millions of dollars)
- --------------------------------------------------------------------------------

                                                                                                    Accumulated
                                                                                                          Other
                                                    Common       Additional     Accumulated       Comprehensive
                                                     Stock          Capital         Deficit       Income (Loss)       Total
                                            --------------  ---------------  --------------   ----------------- -----------
BALANCE, DECEMBER 31, 1997                  $          .8   $        533.8   $      (417.6)   $         -       $    117.0
   Net income/Comprehensive income                   -               -                  .6              -               .6
   Stock options exercised                           -                  .1            -                 -               .1
   Incentive plan accretion                          -                 1.5            -                 -              1.5
                                            --------------  ---------------  --------------   ----------------- -----------

BALANCE, DECEMBER 31, 1998                             .8            535.4          (417.0)             -            119.2

   Net income (loss)                                 -               -               (54.1)             -            (54.1)
   Minimum pension liability
     adjustment, net of tax                          -               -                -                   (1.2)       (1.2)
                                                                                                                -----------

     Comprehensive income (loss)                     -               -                -                 -            (55.3)
   Stock options exercised                           -                  .1            -                 -               .1
   Incentive plan accretion                          -                 1.3            -                 -              1.3
                                            --------------  ---------------  --------------   ----------------- -----------

BALANCE, DECEMBER 31, 1999                             .8            536.8          (471.1)               (1.2)       65.3

   Net income                                        -               -                16.8              -             16.8
   Minimum pension liability
     adjustment, net of tax                          -               -                -                    (.6)        (.6)
                                                                                                                -----------
     Comprehensive income                            -               -                -                 -             16.2
   Incentive plan accretion                          -                  .7            -                 -               .7
                                            --------------  ---------------  --------------   ----------------- -----------

BALANCE, DECEMBER 31, 2000                  $          .8   $        537.5   $      (454.3)   $           (1.8) $     82.2
                                            ==============  ===============  ==============   ================= ===========


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


STATEMENTS OF CONSOLIDATED CASH FLOWS
- --------------------------------------------------------------------------------

                                                                                              Year Ended December 31,
                                                                                        -----------------------------------
(In millions of dollars)                                                                    2000        1999         1998
                                                                                        ----------   ---------   ----------
Cash flows from operating activities:
   Net income (loss)                                                                    $    16.8    $  (54.1)   $      .6
   Adjustments to reconcile net income to net cash (used) provided by operating
       activities:
       Depreciation and amortization (including deferred financing costs of $4.4,
         $4.3 and $3.9)                                                                      81.3        93.8        103.0
       Non-cash impairment charges (Notes 1 and 6)                                           63.3        19.1         45.0
       Gain on involuntary conversion at Gramercy facility                                   -          (85.0)         -
       Gains - real estate related (2000); sale of interests in AKW L.P. (1999)             (39.0)      (50.5)         -
       Non-cash benefit for income taxes                                                      -           -           (8.3)
       Equity in loss (income) of unconsolidated affiliates, net of distributions            13.1        (4.9)          .1
       Minority interests                                                                    (3.0)       (3.1)         (.1)
       (Increase) decrease in trade and other receivables                                  (168.8)       21.7         61.5
       Decrease (increase) in inventories                                                   125.8        (2.6)        24.8
       Decrease (increase) in prepaid expenses and other current assets                      20.8       (66.9)        30.1
       (Decrease) increase in accounts payable (associated with operating activities) and
         accrued interest                                                                   (29.7)       58.8         (3.2)
       Increase (decrease) in payable to affiliates and other accrued liabilities            68.9        19.6        (45.3)
       Decrease in accrued and deferred income taxes                                        (10.2)      (55.2)       (26.2)
       Net (used) provided by long-term assets and liabilities                              (69.4)       15.7        (23.9)
       Other                                                                                 14.7         4.3         12.6
                                                                                        ----------   ---------   ----------

         Net cash provided (used) by operating activities                                    84.6       (89.3)       170.7
                                                                                        ----------   ---------   ----------
Cash flows from investing activities:
   Capital expenditures, net of accounts payable of $34.6 in 2000                          (261.9)      (68.4)       (77.6)
   Gramercy-related property damage insurance recoveries                                    100.0          -            -
   Net proceeds from disposition of property and investments                                 66.9        74.8          6.7
   Other                                                                                       .2        (3.3)        (3.5)
                                                                                        ----------   ---------   ----------

         Net cash (used) provided by investing activities                                   (94.8)        3.1        (74.4)
                                                                                        ----------   ---------   ----------

Cash flows from financing activities:
   Borrowings under credit agreement, net                                                    20.0        10.4           -
   Repayments of long-term debt                                                              (4.4)        (.6)        (8.9)
   Redemption of minority interests' preference stocks                                       (2.8)       (1.6)        (8.7)
   Incurrence of financing costs                                                              (.4)         -           (.6)
   Capital stock issued                                                                      -             .1           .1
   Decrease in restricted cash, net                                                          -             .8          4.3
                                                                                        ----------   ---------   ----------

         Net cash provided (used) by financing activities                                    12.4         9.1        (13.8)
                                                                                        ----------   ---------   ----------

Net increase (decrease) in Cash and cash equivalents during the year                          2.2       (77.1)        82.5
Cash and cash equivalents at beginning of year                                               21.2        98.3         15.8
                                                                                        ----------   ---------   ----------

Cash and cash equivalents at end of year                                                $    23.4    $   21.2    $    98.3
                                                                                        ==========   =========   ==========

Supplemental disclosure of cash flow information:
   Interest paid, net of capitalized interest of $6.5, $3.4 and $3.0                    $   105.3    $  105.4    $   106.3
   Income taxes paid                                                                         19.6        24.1         16.8


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

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation. The consolidated financial statements include the
statements of Kaiser Aluminum Corporation ("Kaiser" or the "Company") and its
majority owned subsidiaries. The Company is a subsidiary of MAXXAM Inc.
("MAXXAM") and conducts its operations through its wholly-owned subsidiary,
Kaiser Aluminum & Chemical Corporation ("KACC"). KACC operates in all
principal aspects of the aluminum industry-the mining of bauxite (the major
aluminum bearing ore), the refining of bauxite into alumina (the intermediate
material), the production of primary aluminum, and the manufacture of fabricated
and semi-fabricated aluminum products. Kaiser's production levels of alumina,
before consideration of the Gramercy incident (see Note 2), and primary aluminum
exceed its internal processing needs, which allows it to be a major seller of
alumina and primary aluminum to domestic and international third parties (see
Note 14).

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
operation.

Investments in 50%-or-less-owned entities are accounted for primarily by the
equity method. Intercompany balances and transactions are eliminated.

Net sales and cost of products sold for 1999 and 1998 have been restated to
conform to a new accounting principle that requires freight charges ($39.3 in
1999 and $46.0 in 1998) to be included in cost of products sold.

Liquidity/Cash Resources. KACC has significant near-term debt maturities. KACC's
ability to make payments on and refinance its debt depends on its ability to
generate cash in the future. In addition to being impacted by power sales and
normal operating items, the Company's and KACC"s near-term liquidity and cash
flows will also be affected by the Gramercy incident, net payments for
asbestos-related liabilities and possible proceeds from asset dispositions. For
discussions of these matters, see Notes 2, 7, 8 and 12.

Recognition of Sales. Sales are recognized when title, ownership and risk of
loss pass to the buyer. No changes were required to the Company's revenue
recognition policy as a result of Staff Accounting Bulletin 101, "Revenue
Recognition in Financial Statements", which become effective during 2000.

Earnings per Share. Basic earnings per share is computed by dividing the
weighted average number of common shares outstanding during the period,
including the weighted average impact of the shares of common stock issued
during the year from the date(s) of issuance.

Diluted earnings per share for the years ended December 31, 2000 and 1998
include the dilutive effect of outstanding stock options (3,000 shares and
41,000 shares, respectively). The impact of outstanding stock options was
excluded from the computation of diluted loss per share for the year ended
December 31, 1999, as its effect would have been antidilutive.

Cash and Cash Equivalents. The Company considers only those short-term, highly
liquid investments with original maturities of 90 days or less to be cash
equivalents.

Inventories. Substantially all product inventories are stated at last-in,
first-out ("LIFO") cost, not in excess of market value. Replacement cost is not
in excess of LIFO cost. Inventories at December 31, 2000, have been reduced by
LIFO inventory charges totaling $24.1 ($.6 in cost of products sold and $23.5 in
non-recurring operating items, net). The non-recurring LIFO charges result
primarily from the Washington smelters' curtailment ($4.5), the exit from the
can body stock product line ($11.1) and the delayed restart of the Gramercy
facility ($7.0). Other inventories, principally operating supplies and repair
and maintenance parts, are stated at the lower of average cost or market.
Inventory costs consist of material, labor, and manufacturing overhead,
including depreciation. Inventories consist of the following:

                                                                           December 31,
                                                                    --------------------------
                                                                          2000           1999
- ----------------------------------------------------------------------------------------------
Finished fabricated products                                        $      54.6     $    118.5
Primary aluminum and work in process                                      126.9          189.4
Bauxite and alumina                                                        88.6          124.1
Operating supplies and repair and maintenance parts                       126.1          114.1
                                                                    -----------     ----------
                                                                    $     396.2     $    546.1
                                                                    ===========     ==========

Depreciation. Depreciation is computed principally by the straight-line method
at rates based on the estimated useful lives of the various classes of assets.
The principal estimated useful lives of land improvements, buildings, and
machinery and equipment are 8 to 25 years, 15 to 45 years, and 10 to 22 years,
respectively.

Stock-Based Compensation. The Company applies the intrinsic value method to
account for a stock-based compensation plan whereby compensation cost is
recognized only to the extent that the quoted market price of the stock at the
measurement date exceeds the amount an employee must pay to acquire the stock.
No compensation cost has been recognized for this plan as the exercise price of
the stock options granted in 2000, 1999 and 1998 were at or above the market
price. The pro forma after-tax effect of the estimated fair value of the grants
would be to reduce net income in 2000 by $2.2, increase the net loss in 1999 by
$1.8 and reduce net income in 1998 by $1.5. The fair value of the 2000, 1999 and
1998 stock option grants were estimated using a Black-Scholes option pricing
model.

Other Income (Expense). Amounts included in other income (expense) in 2000, 1999
and 1998, other than interest expense and gain on involuntary conversion at the
Gramercy facility, included the following pre-tax gains (losses):



                                                                                          Year Ended December 31,
                                                                                -------------------------------------
                                                                                    2000          1999        1998
- ---------------------------------------------------------------------------------------------------------------------
Asbestos-related charges (Note 12)                                              $    (43.0)  $    (53.2)  $    (12.7)
Gain on sale of Pleasanton complex (Note 4)                                           22.0          -           -
Lease obligation adjustment (Note 12)                                                 17.0          -           -
Mark-to-market gains (losses) (Note 13)                                               11.0        (32.8)        -
Gain on sale of interests in AKW L.P. (Note 3)                                        -            50.5         -
Environmental cost insurance recoveries (Note 12)                                     -             -           12.0
All other, net                                                                       (11.3)         (.4)         4.2
                                                                                -----------  -----------  -----------
                                                                                $     (4.3)  $    (35.9)  $      3.5
                                                                                ===========  ===========  ===========

Deferred Financing Costs. Costs incurred to obtain debt financing are deferred
and amortized over the estimated term of the related borrowing. Such
amortization is included in Interest expense.

Foreign Currency. The Company uses the United States dollar as the functional
currency for its foreign operations.

Derivative Financial Instruments. Hedging transactions using derivative
financial instruments are primarily designed to mitigate KACC's exposure to
changes in prices for certain of the products which KACC sells and consumes and,
to a lesser extent, to mitigate KACC's exposure to changes in foreign currency
exchange rates. KACC does not utilize derivative financial instruments for
trading or other speculative purposes. KACC's derivative activities are
initiated within guidelines established by management and approved by KACC's and
the Company's boards of directors. Hedging transactions are executed centrally
on behalf of all of KACC's business segments to minimize transaction costs,
monitor consolidated net exposures and allow for increased responsiveness to
changes in market factors.

Most of KACC's hedging activities involve the use of option contracts (which
establish a maximum and/or minimum amount to be paid or received) and forward
sales contracts (which effectively fix or lock-in the amount KACC will pay or
receive). Option contracts typically require the payment of an up-front premium
in return for the right to lock-in a minimum or maximum price. Forward sales
contracts do not require an up-front payment and are settled by the receipt or
payment of the amount by which the price at the settlement date varies from the
contract price. Consistent with accounting guidelines in place through December
31, 2000, any interim fluctuations in option prices prior to the settlement date
were deferred until the settlement date of the underlying hedged transaction, at
which time they were reflected in net sales or cost of products sold (as
applicable) together with the related premium cost. No accounting recognition
was accorded to interim fluctuations in prices of forward sales contracts. Hedge
(deferral) accounting would have been terminated (resulting in the applicable
derivative positions being marked-to-market) if the level of underlying physical
transactions ever fell below the net exposure hedged. This did not occur in
1998, 1999 or 2000. Deferred gains or losses as of December 31, 2000, were
included in Prepaid expenses and other current assets and Other accrued
liabilities (see Note 13).

Beginning with the quarterly period ending March 31, 2001, the Company will
begin reporting derivative activities consistent with Statement of Financial
Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 133, which has been adopted as of January 1, 2001,
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" all of its
hedging positions at each period-end. This contrasts with guidance under
pre-2001 accounting principles which generally only required certain
"non-qualifying" hedging positions to be marked-to-market. Changes in the market
value of the Company's open hedging positions resulting from the mark-to-market
process will represent unrealized gains or losses. Such unrealized gains or
losses will change, based on prevailing market prices at each subsequent balance
sheet date, until the transaction date occurs. Under SFAS No. 133, these changes
will be reflected as an increase or reduction in stockholders' equity through
either other comprehensive income or net income, depending on the nature of the
hedging instrument used. To the extent that changes in market value of the
Company's hedging positions are initially recorded in other comprehensive
income, such changes will reverse out of other comprehensive income (net of any
fluctuations in other "open" positions) and will be reflected in net income when
the subsequent physical transactions occur. As of December 31, 2000, the amount
of the Company's other comprehensive income adjustments were not significant so
there was not a significant difference between net income and comprehensive
income. However, differences between comprehensive income and net income may
become significant in future periods as a result of SFAS No. 133. In general,
SFAS No. 133 will result in material fluctuations in comprehensive income, net
income and stockholders' equity in periods of price volatility, despite the fact
that the Company's cash flow and earnings will be "fixed" to the extent hedged.
This result is contrary to the intent of the Company's hedging program, which is
to "lock-in" a price (or range of prices) for products sold/used so that
earnings and cash flows are subject to reduced risk of volatility.

SFAS No. 133 requires that as of the date of the initial adoption, the
difference between the market value of derivative instruments recorded on the
Company's consolidated balance sheet and the previous carrying amount of those
derivatives be reported in net income or other comprehensive income, as
appropriate, as the cumulative effect of a change in accounting principle. As
previously discussed, this impact will be reflected in the Company's first
quarter 2001 financial statements. The adoption of SFAS No. 133 will result in a
pre-tax benefit of $21.2 to other comprehensive income and an essentially
offsetting pre-tax charge of $18.9 to earnings, such that the net effect of the
adoption of SFAS No. 133 on stockholders' equity will be small. See Note 13 for
additional discussions regarding the Company's derivatives.

Fair Value of Financial Instruments. The Company estimates the fair value of its
outstanding indebtedness to be $798.3 and $970.5 as of December 31, 2000 and
1999, respectively, based on quoted market prices for KACC's 97/8% Senior Notes
due 2002 (the "97/8% Notes"), 12 3/4% Senior Subordinated Notes due 2003 (the
"12 3/4% Notes"), and 107/8% Senior Notes due 2006 (the "107/8% Notes"), and the
discounted future cash flows for all other indebtedness, using the current rate
for debt of similar maturities and terms. The Company believes that the carrying
amount of other financial instruments is a reasonable estimate of their fair
value, unless otherwise noted.

2.   INCIDENT AT GRAMERCY FACILITY

In July 1999, KACC'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. In connection
with the settlement of the U.S. Mine Safety and Health Administration's ("MSHA")
investigation of the incident, KACC is paying a fine of $.5 but denied the
alleged violations. 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
commenced during the middle of December 2000. The plant is expected to increase
production progressively to approximately 75% of its newly rated estimated
annual capacity of 1,250,000 tons by the end of March 2001. At February 28,
2001, the plant was operating at 70% of capacity. Based on current estimates,
construction at the facility is expected to be completed during the third
quarter of 2001.

KACC has significant amounts of insurance coverage related to the Gramercy
incident. Deductibles and self-retention provisions under the insurance coverage
for the incident total $5.0, which amounts were charged to Other non-recurring
operating items, net in 1999 (Note 6). KACC'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. KACC's insurance policies provide that KACC 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, KACC recorded a pretax gain
of $85.0, representing the difference between the minimum expected property
damage reimbursement amount of $100.0 and the net carrying value of the damaged
property of $15.0. The reimbursement amount was classified as a receivable in
Other assets at December 31, 1999. The full amount of the receivable was
collected in 2000. Additional recoveries are possible. See "Timing and Amount of
Additional Insurance Recoveries" below.

Clean-up and Site Preparation. The Gramercy facility incurred incremental costs
for clean-up and other activities during 1999 and 2000. These clean-up and site
preparation activities have been offset by accruals of approximately $24.0, of
which $10.0 were accrued in 2000, for estimated insurance recoveries.

Business Interruption. KACC'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. Through
December 2000, KACC purchased alumina from third parties, in excess of the
amounts of alumina available from other KACC-owned facilities, to supply these
customers' needs as well as to meet intersegment requirements. The excess cost
of such open market purchases was substantially offset by insurance recoveries.
However, the insurers have alleged that certain sublimits within KACC's
insurance coverage have been reached, and, accordingly, any additional excess
purchase costs incurred in 2001 will be substantially unreimbursed. However, as
the facility is approaching 75% of its newly rated production capacity, any such
unreimbursed costs will be limited. The insurers have also asserted that no
additional business interruption amounts are due after November 30, 2000. After
considering all of the foregoing items, KACC recorded expected business
interruption insurance recoveries totaling $151.0, of which $110.0 was recorded
in the year ended December 31, 2000, as a reduction of Cost of products sold,
which amounts substantially offset actual expenses incurred during these
periods. Such business interruption insurance amounts represent estimates of
KACC's business interruption coverage based on discussions with the insurance
carriers and their representatives and are therefore subject to change. See
"Timing and Amount of Additional Insurance Recoveries" below.

Depreciation expense for the first six months of 1999 was approximately $6.0.
KACC suspended depreciation at the facility starting in July 1999 since
production had been completely curtailed. However, in accordance with an
agreement with KACC's insurers, during the second half of 2000, the Company
recorded a depreciation charge of $14.3, of which $1.5 was recorded in the
fourth quarter, representing the previously unrecorded depreciation related to
the undamaged portion of the facility for the period from July 1999 through
November 2000. However, this charge did not have any impact on the Company's
operating results as the Company has reflected (as a reduction of depreciation
expense) an equal and offsetting insurance receivable (incremental to the
amounts discussed in the preceding paragraph) since the insurers have agreed to
reimburse the Company this amount. Since production at the facility was
partially restored during December 2000, normal depreciation has commenced. Such
depreciation will exceed prior historical rates primarily due to the capital
costs on the newly constructed assets.

Liability. The incident has also resulted in more than ninety individual and
class action lawsuits being filed against KACC and others alleging, among other
things, property damage, business interruption losses by other businesses and
personal injury. The aggregate amount of damages sought in the lawsuits and
other claims cannot be determined at this time; however, KACC does not currently
believe the damages will exceed the amount of coverage under its liability
policies.

Workers' Compensation. While it is presently impossible to determine the
aggregate amount of claims that may be incurred, KACC 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 and Amount of Additional Insurance Recoveries. Through December 31, 2000,
the Company had recorded $289.3 of estimated insurance recoveries related to the
property damage, clean-up and site preparation and business interruption aspects
of the Gramercy incident and had collected $252.6 of such amounts. Through
February 2001, an additional $10.0 had been received with respect to the
estimated recoveries at year-end 2000 and an additional $7.0 is expected in
March 2001. The remaining balance of approximately $20.0 and any additional
amounts possibly due to KACC are not expected to be recovered until KACC and the
insurers resolve their differences. KACC and the insurers are currently
negotiating an arbitration agreement as a means of resolving their differences.
The Company anticipates that the remaining issues will not be resolved until
late 2001 or early 2002. KACC and the Company continue to believe that a minimum
of approximately $290.0 of insurance recoveries are probable, that additional
amounts are owed to KACC by the insurers, and that the likelihood of any refund
by KACC of amounts previously received from the insurers is remote. However, no
assurances can be given as to the ultimate outcome of this matter or its impact
on the Company's and KACC's near-term liquidity and results of operations.

Neither KACC nor the Company intend to record any additional insurance-related
recoveries in 2001 unless and until agreed to by the insurers or until the
arbitration process is completed. As such, the Company's and KACC's future
operating results will be adversely affected until all of the additional
costs/lost profits related to the Gramercy plant's start-up and return to full
production are eliminated or until any amounts related to 2001 ultimately
determined to be due to KACC through negotiation with the insurers or as a part
of the arbitration process are received.

Other. During the third quarter of 2000, KACC incurred approximately $11.5 of
normal recurring maintenance expenditures for the Gramercy facility (which
amounts were reflected in Other non-recurring operating items, net - see Note 6)
that otherwise would have been incurred in the ordinary course of business over
the next one to three years. The Company chose to incur these expenditures now
to avoid normal operational outages that otherwise would have occurred once the
facility resumes production.

3.   INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

Summary of combined financial information is provided below for unconsolidated
aluminum investments, most of which supply and process raw materials. The
investees are Queensland Alumina Limited ("QAL") (28.3% owned), Anglesey
Aluminium Limited ("Anglesey") (49.0% owned) and Kaiser Jamaica Bauxite Company
(49.0% owned). The equity in income (loss) before income taxes of such
operations is treated as a reduction (increase) in Cost of products sold. At
December 31, 2000 and 1999, KACC's net receivables from these affiliates were
not material.

KACC was a founding partner (during 2000) in MetalSpectrum, LLC, an independent
neutral online site to serve manufacturers, distributors and customers in the
specialty metals business. Since KACC's interest in MetalSpectrum is less than
10%, it is being accounted for on the cost basis.

On April 1, 1999, KACC sold its 50% interest in AKW L.P. ("AKW") to its partner
for $70.4, which resulted in the Company recognizing a net pre-tax gain of $50.5
(included in Other income (expense) - Note 1). The Company's equity in income of
AKW was $2.5 and $7.8 for the years ended December 31, 1999 and 1998,
respectively.

Summary of Combined Financial Position

                                                                                 December 31,
                                                                          --------------------------
                                                                                2000            1999
- ----------------------------------------------------------------------------------------------------
Current assets                                                            $    350.1      $    370.4
Long-term assets (primarily property, plant, and equipment, net)               327.3           344.1
                                                                          ----------      ----------
     Total assets                                                         $    677.4      $    714.5
                                                                          ==========      ==========
Current liabilities                                                       $    144.1      $    120.4
Long-term liabilities (primarily long-term debt)                               331.4           368.3
Stockholders' equity                                                           201.9           225.8
                                                                          ----------      ----------
     Total liabilities and stockholders' equity                           $    677.4      $    714.5
                                                                          ==========      ==========


Summary of Combined Operations

                                                                                              Year Ended December 31,
                                                                                        -----------------------------------
                                                                                          2000          1999         1998
- ---------------------------------------------------------------------------------------------------------------------------
Net sales                                                                               $ 602.9       $ 594.9      $ 659.2
Costs and expenses                                                                       (617.1)       (582.9)      (651.7)
Benefit (provision) for income taxes                                                       (4.5)           .8         (2.7)
                                                                                        --------      --------     --------
Net income (loss)                                                                       $ (18.7)      $  12.8      $   4.8
                                                                                        ========      ========     ========
Company's equity in income (loss)                                                       $  (4.8)      $   4.9      $   5.4
                                                                                        ========      ========     ========
Dividends received                                                                      $   8.3       $    -       $   5.5
                                                                                        ========      ========     ========

The Company's equity in income differs from the summary net income (loss) due to
varying percentage ownerships in the entities and equity method accounting
adjustments. Prior to December 31, 2000, KACC's investment in its unconsolidated
affiliates exceeded its equity in their net assets and such excess was being
amortized to Depreciation and amortization. At December 31, 2000, the excess
investment had been fully amortized. Such amortization was approximately $10.0
for each of the years ended December 31, 2000, 1999 and 1998.

The Company and its affiliates have interrelated operations. KACC provides some
of its affiliates with services such as management and engineering. Significant
activities with affiliates include the acquisition and processing of bauxite,
alumina, and primary aluminum. Purchases from these affiliates were $235.7,
$223.7 and $235.1, in the years ended December 31, 2000, 1999 and 1998,
respectively.

4.   PROPERTY, PLANT, AND EQUIPMENT

The major classes of property, plant, and equipment are as follows:

                                                            December 31,
                                                     --------------------------
                                                         2000            1999
- -------------------------------------------------------------------------------
Land and improvements                                $   130.7       $   166.1
Buildings                                                197.2           230.0
Machinery and equipment                                1,702.8         1,519.7
Construction in progress                                 130.3            67.7
                                                     ----------      ----------
                                                       2,161.0         1,983.5
Accumulated depreciation                                (984.9)         (929.8)
                                                     ----------      ----------
     Property, plant, and equipment, net             $ 1,176.1       $ 1,053.7
                                                     ==========      ==========

KACC evaluated the recoverability of the approximate $200.0 carrying value of
its Washington smelters, as a result of the change in the economic environment
of the Pacific Northwest associated with the reduced power availability and
higher power costs for KACC's Washington smelters under the terms of the new
contract with the Bonneville Power Administration ("BPA") starting in October
2001 (see Note 7). The Company determined that the expected future undiscounted
cash flows of the Washington smelters were below their carrying value.
Accordingly, during the fourth quarter of 2000, KACC adjusted the carrying value
of its Washington smelting assets to their estimated fair value, which resulted
in a non-cash impairment charge of approximately $33.0 (which amount was
reflected in Other non-recurring operating items, net - see Note 6). The
estimated fair value was based on anticipated future cash flows discounted at a
rate commensurate with the risk involved.

During September 2000, KACC sold its Pleasanton, California, office complex
because the complex had become surplus to the Company's needs. Net proceeds from
the sale were approximately $51.6 and resulted in a net pre-tax gain of $22.0
(included in Other income (expense) - see Note 1).

In May 2000, KACC 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. 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, KACC, 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 year ended December 31, 2000.

In February 2000, KACC completed the sale of the Micromill assets and technology
for a nominal payment at closing and possible future payments based on
subsequent performance and profitability of the Micromill technology. The sale
did not have a material impact on the Company's 2000 operating results. As a
result of the changes in strategic course in the further development and
deployment of KACC's Micromill technology , the carrying value of the Micromill
assets was reduced by recording impairment charges of $19.1 and $45.0 in 1999
and 1998, respectively (see Note 6).

5.   LABOR DISPUTE, SETTLEMENT AND RELATED COSTS

As previously reported, prior to the settlement of the labor dispute discussed
below, KACC was operating five of its U.S. facilities with salaried employees
and other employees as a result of the September 30, 1998, strike by the United
Steelworkers of America ("USWA") and the subsequent "lock-out" by KACC in
January 1999. The labor dispute was settled in September 2000. A significant
portion of the issues were settled through direct negotiations between KACC and
the USWA and the remaining issues were settled pursuant to an agreed-upon
arbitration process. Under the terms of the settlement, USWA members generally
returned to the affected plants during October 2000. The new labor contract,
which expires in September 2005, provides for a 2.6% average annual increase in
the overall wage and benefit packages, results in the reduction of at least 540
hourly jobs at the five facilities (from approximately 2,800 on September 30,
1998), allows KACC greater flexibility in using outside contractors and provides
for productivity gains by allowing KACC to utilize the knowledge obtained during
the labor dispute without many of the work-rule restrictions that were a part of
the previous labor contract. The Company has recorded a one-time pre-tax charge
of $38.5 in its results of operations for the year ended December 31, 2000, to
reflect the incremental, non-recurring impacts of the labor settlement,
including severance and other contractual obligations for non-returning workers.
At December 31, 2000, the total remaining liability associated with the labor
settlement charge was $16.3. It is anticipated that substantially all remaining
costs will be incurred during 2001 or early 2002. See Note 14 for the allocation
of the labor settlement charge by business unit.

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

On March l, 2001, in connection with the USWA settlement agreement, KACC
redeemed all of its Cumulative (1985 Series A) and Cumulative (1985 Series B)
Preference Stock. See Note 11.

6.   NON-RECURRING OPERATING ITEMS, NET (OTHER THAN LABOR SETTLEMENT)

The income (loss) impact associated with non-recurring operating items, net,
other than the labor settlement charge, for 2000, 1999 and 1998 was as follows:


                                                                                      Year Ended December 31,
                                                                             ----------------------------------------
                                                    Business Segment                2000          1999         1998
- ---------------------------------------------------------------------------------------------------------------------
Net gains from power sales (Note 7)              Primary Aluminum            $     159.5   $     -        $    -
Impairment charge - Washington
     smelters  (Note 4)                          Primary Aluminum                  (33.0)        -             -
Gramercy related items:
     Incremental maintenance (Note 2)            Bauxite & Alumina             (11.5)        -             -
     Insurance deductibles, etc. (Note 2)        Bauxite & Alumina            -               (4.0)        -
                                                 Corporate                        -               (1.0)        -
     LIFO inventory charge (Note 1)              Bauxite & Alumina              (7.0)        -             -
Impairment charges associated with
     product line exits                          Flat-Rolled Products              (12.6)        -             -
                                                 Engineered Products                (5.6)        -             -
Restructuring charges                            Bauxite & Alumina               (.8)        -             -
                                                 Primary Aluminum                   (3.1)        -             -
                                                 Corporate                          (5.5)        -             -
Micromill impairment (Note 4)                    Micromill                        -              (19.1)       (45.0)
Incremental strike-related costs                 Bauxite & Alumina            -              -            (11.0)
                                                 Primary Aluminum                 -              -            (29.0)
                                                 Flat-Rolled Products             -              -            (16.0)
                                                 Engineered Products              -              -             (4.0)
                                                                             ------------  ------------   ----------
                                                                             $      80.4   $     (24.1)   $  (105.0)
                                                                             ============  ============   ==========

The $12.6 impairment charge reflected by KACC's Flat-Rolled products segment in
2000 includes a $11.1 LIFO inventory charge (see Note 1), of which $3.6 was
recorded in the fourth quarter of 2000, and a $1.5 charge to reduce the carrying
value of certain assets to their estimated net realizable value as a result of
the segment's decision to exit the can body stock product line. The $5.6
impairment charge recorded by KACC's Engineered products segment in 2000
includes a $.9 LIFO inventory charge (all in the fourth quarter of 2000) and a
$4.7 charge to reduce the carrying value of certain machining facilities and
assets, which are no longer required as a result of the segment's decision to
exit a marginal product line, to their estimated net realizable value.

The restructuring charges recorded by KACC's Primary aluminum segment in 2000
represent employee benefit and other costs for approximately 50 job eliminations
reflecting a reduced emphasis on technology sales and reduced salaried employee
requirements at KACC's Tacoma facility, given its current curtailment. The
Corporate portion of the restructuring charges in 2000 represent employee
benefit and other costs associated with the consolidation or elimination of
certain corporate staff functions. The Corporate restructuring initiatives in
2000 involve a group of approximately 50 employees. As of December 31, 2000, the
total remaining liability associated with both restructuring efforts was $2.8.
It is anticipated that all remaining costs will be incurred during 2001.

The incremental strike-related costs in 1998 reflect the adverse impact on the
Company's profitability due to the USWA strike in September 1998.

7.   PACIFIC NORTHWEST POWER SALES AND OPERATING LEVEL

Power Sales. In response to the unprecedented high market prices for power in
the Pacific Northwest, KACC temporarily curtailed the primary aluminum
production at the Tacoma and Mead, Washington smelters during the second half of
2000 and sold a portion of the power that it had under contract through
September 30, 2001. As a result of the curtailments, KACC avoided the need to
purchase power on a variable market price basis and will receive cash proceeds
sufficient to more than offset the cash impact of the potline curtailments over
the period for which the power was sold. To implement the curtailment, KACC
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 in June 2000 and temporarily curtailed the remaining Mead potlines
during the fourth quarter of 2000. One-half of a potline at the Tacoma smelter
was already curtailed. The Company recorded net pre-tax gains of approximately
$159.5 in 2000, of which $103.2 was recorded in the fourth quarter, as a result
of these power sales. The net gain amounts were composed of gross proceeds of
$207.8, of which $88.0 (included in Receivables - other at December 31, 2000)
was received through February 28, 2001. The gross proceeds were offset by
employee-related expenses, incremental excess power costs, a non- cash LIFO
inventory charge and other fixed commitments, which amounts are expected to be
paid through September 2001. The resulting net gains have been reflected in
Other non-recurring operating items, net (see Note 6).

As previously announced, in a series of transactions completed during the first
quarter of 2001, KACC agreed to sell a substantial majority of the remaining
power that it had under contract through September 2001. These power sales,
before consideration of any applicable non-energy costs (which have yet to be
determined), are expected to result in pre-tax gains of approximately $260.0 in
the first quarter of 2001. Approximately one-half of the net proceeds are
expected to be received in late March 2001, with the balance being received
periodically through October 2001. Based on the forward price for power
experienced during the first quarter of 2001, the value of the remaining power
that KACC has under contract that can be sold is estimated to be between $20.0
and $40.0.

Future Power Supply. During October 2000, KACC signed a new power contract with
the BPA under which the BPA will provide KACC's operations in the State of
Washington with power during the period October 2001 through September 2006. The
contract will provide KACC with sufficient power to fully operate KACC's
Trentwood facility as well as approximately 40% of the combined capacity of
KACC's Mead and Tacoma aluminum smelting operations. Power costs under the new
contract are expected to exceed the cost of power under KACC's current BPA
contract by between 20% to 60% and, perhaps, by as much as 100% in certain
periods. Additional provisions of the new BPA contract include a take-or-pay
requirement, an additional cost recovery mechanism under which KACC's base power
rate could be increased and clauses under which KACC's power allocation could be
curtailed, or its costs increased, in certain instances. KACC does not have any
remarketing rights under the new BPA contract. KACC has the right to terminate
the contract until certain pricing and other provisions of the BPA contract are
finalized, which is expected to be mid-2001.

Depending on the ultimate price for power under the terms of the new BPA
contract or the availability of an alternate power supply at an acceptable
price, KACC may be unable to operate the Mead and Tacoma smelters in the near or
long-term. Under KACC's contract with the USWA, KACC is liable for certain
severance and supplemental unemployment benefits for laid-off workers. Costs
related to the period from January 1, 2001 to September 30, 2001 have been
accrued to the extent the costs were fixed and determinable. However, the
Company may become liable for additional costs. In particular, the Company would
become liable for certain early retirement benefits for USWA workers at the Mead
and Tacoma facilities if such facilities are not restarted prior to late 2002 or
early 2003. Such costs could be significant and would adversely impact the
Company's operating results and liquidity.

8.   LONG-TERM DEBT

Long-term debt and its maturity schedule are as follows:

                                                                                                               December 31,
                                                                                                             ----------------
                                                                                                     2006
                                                                                                      and       2000     1999
                                                       2001      2002    2003     2004     2005     After      Total    Total
- -----------------------------------------------------------------------------------------------------------------------------

Credit Agreement                                    $  30.4                                                  $  30.4  $  10.4
97/8% Senior Notes due 2002, net                             $  224.8                                          224.8    224.6
107/8% Senior Notes due 2006, net                                                                  $  225.5    225.5    225.6
12 3/4% Senior Subordinated Notes due 2003                               $ 400.0                               400.0    400.0
Alpart CARIFA Loans - (fixed and variable rates)
     due 2007, 2008                                                                                    56.0     56.0     60.0
Other borrowings (fixed and variable rates)             1.2        .2         .2  $    .2  $    .2     50.7     52.7     52.2
                                                    -------  ---------   -------- -------  ------- --------  -------  -------
Total                                               $  31.6  $  225.0    $ 400.2  $    .2  $    .2 $  332.2    989.4    972.8
                                                    =======  =========   ======== =======  ======= ========
Less current portion                                                                                            31.6       .3
                                                                                                             -------  -------
     Long-term debt                                                                                          $ 957.8  $ 972.5
                                                                                                             =======  =======

Credit Agreement and Liquidity. The Company and KACC have a credit agreement, as
amended, (the "Credit Agreement") which provides a secured, revolving line of
credit through August 15, 2001. KACC is able to borrow under the facility by
means of revolving credit advances and letters of credit (up to $125.0) in an
aggregate amount equal to the lesser of $300.0 (reduced from $325.0 in December
2000) or a borrowing base relating to eligible accounts receivable and eligible
inventory. As of December 31, 2000, $155.3 (of which $69.3 could have been used
for letters of credit) was available to KACC under the Credit Agreement. The
Credit Agreement is unconditionally guaranteed by the Company and by certain
significant subsidiaries of KACC. Interest on any outstanding balances will bear
a spread (which varies based on the results of a financial test) over either a
base rate or LIBOR, at KACC's option. The interest rate at December 31, 2000 was
11.0%. As of February 28, 2001, there were $94.0 of borrowings outstanding under
the Credit Agreement and remaining availability of approximately $120.0.
However, proceeds of approximately $130.0 related to 2001 power sales are
expected to be received at or near March 30, 2001, and an additional $130.0 of
power proceeds will be received periodically through October 2001 with respect
to other power sales made during the first quarter of 2001.

It is the Company's and KACC's intention to extend or replace the Credit
Agreement prior to its expiration. However, in order for the Credit Agreement to
be extended, on a short-term basis, beyond August 2001, KACC will have to have a
plan to mitigate the $225.0 million of 97/8% Notes, due February 2002. For the
Credit Agreement to be extended past February 2003, both the 97/8% Notes and the
12 3/4% Notes, due February 2003, will have to be retired and/or refinanced. As
of February 28, 2001, KACC had received approval from the Credit Agreement
lenders to purchase up to $50.0 of the 97/8% Notes. As of February 28, 2001,
KACC has purchased approximately $1.0 of 97/8% Notes.

As previously disclosed, KACC is considering the possible sale of part or all of
its interests in certain operating assets. The contemplated transactions are in
various stages of development. KACC expects that at least one operating asset
will be sold.

KACC has multiple transactions under way. It is unlikely, however, that it would
consummate all of the transactions under consideration. Further, there can be no
assurance as to the likelihood, timing or terms of such sales. The Company would
expect to use the proceeds from any such sales for debt reduction, capital
spending or some combination thereof.

Alpart CARIFA Loans. In December 1991, Alumina Partners of Jamaica ("Alpart")
entered into a loan agreement with the Caribbean Basin Projects Financing
Authority ("CARIFA"). As of December 31, 2000, Alpart's obligations under the
loan agreement were secured by two letters of credit aggregating $59.7. KACC was
a party to one of the two letters of credit in the amount of $38.8 in respect of
its ownership interest in Alpart. Alpart has also agreed to indemnify
bondholders of CARIFA for certain tax payments that could result from events, as
defined, that adversely affect the tax treatment of the interest income on the
bonds.

During March 2000, Alpart redeemed $4.0 principal amount of the CARIFA loans.
During March 2001, Alpart redeemed an additional $34.0 principal amount of the
CARIFA loans and, accordingly, KACC's letter of credit securing the loans was
reduced to $15.3. The March 2001 redemption had a modest beneficial effect on
the unused availability remaining under the Credit Agreement as the additional
Credit Agreement borrowings of $22.1 required for KACC's share of the redemption
were more than offset by a reduction in the amount of letters of credit
outstanding.

Debt Covenants and Restrictions. The Credit Agreement requires KACC to comply
with certain financial covenants and places restrictions on the Company's and
KACC's ability to, among other things, incur debt and liens, make investments,
pay dividends, undertake transactions with affiliates, make capital
expenditures, and enter into unrelated lines of business. The Credit Agreement
is secured by, among other things, (i) mortgages on KACC's major domestic plants
(excluding KACC's Gramercy alumina plant); (ii) subject to certain exceptions,
liens on the accounts receivable, inventory, equipment, domestic patents and
trademarks, and substantially all other personal property of KACC and certain of
its subsidiaries; (iii) a pledge of all the stock of KACC owned by Kaiser; and
(iv) pledges of all of the stock of a number of KACC's wholly owned domestic
subsidiaries, pledges of a portion of the stock of certain foreign subsidiaries,
and pledges of a portion of the stock of certain partially owned foreign
affiliates.

The obligations of KACC with respect to its 97/8% Notes, its 107/8% Notes and
its 12 3/4% Notes are guaranteed, jointly and severally, by certain subsidiaries
of KACC. The indentures governing the 97/8% Notes, the 107/8% Notes and the 12
3/4% Notes (collectively, the "Indentures") restrict, among other things, KACC's
ability to incur debt, undertake transactions with affiliates, and pay
dividends. Further, the Indentures provide that KACC must offer to purchase the
97/8% Notes, the 107/8% Notes and the 12 3/4% Notes, respectively, upon the
occurrence of a Change of Control (as defined therein), and the Credit Agreement
provides that the occurrence of a Change in Control (as defined therein) shall
constitute an Event of Default thereunder.

The Credit Agreement does not permit the Company, and significantly restricts
KACC's ability, to pay dividends on their common stock.

Restricted Net Assets of Subsidiaries. Certain debt instruments restrict the
ability of KACC to transfer assets, make loans and advances, and pay dividends
to the Company. The restricted net assets of KACC totaled $87.0 and $70.7 at
December 31, 2000 and 1999, respectively.

9.   INCOME TAXES

Income (loss) before income taxes and minority interests by geographic area is
as follows:

                                                        Year Ended December 31,
                                              -------------------------------------------
                                                  2000             1999            1998
- -----------------------------------------------------------------------------------------
Domestic                                      $   (96.6)      $    (81.8)      $   (93.6)
Foreign                                           122.0             (8.1)           77.7
                                              ----------      -----------      ----------

     Total                                    $    25.4       $    (89.9)      $   (15.9)
                                              =========       ===========      ==========


Income taxes are classified as either domestic or foreign, based on whether
payment is made or due to the United States or a foreign country. Certain income
classified as foreign is also subject to domestic income taxes.

The (provision) benefit for income taxes on income (loss) before income taxes
and minority interests consists of:


                                             Federal           Foreign           State          Total
- -----------------------------------------------------------------------------------------------------
2000     Current                        $      (1.9)      $     (35.3)     $      (.3)     $   (37.5)
         Deferred                              35.5              (8.9)            (.7)          25.9
                                        ------------      ------------     -----------     ----------
              Total                     $      33.6       $     (44.2)     $     (1.0)     $   (11.6)
                                        ============      ============     ===========     ==========

1999     Current                        $       (.5)      $     (23.1)     $      (.3)     $   (23.9)
         Deferred                              43.8               7.1             5.7           56.6
                                        ------------      ------------     -----------     ----------
              Total                     $      43.3       $     (16.0)     $      5.4      $    32.7
                                        ============      ============     ===========     ==========

1998     Current                        $      (1.8)      $     (16.5)     $      (.2)     $   (18.5)
         Deferred                              44.4             (12.5)            3.0           34.9
                                        ------------      ------------     -----------     ----------
              Total                     $      42.6       $     (29.0)     $      2.8      $    16.4
                                        ============      ============     ===========     ==========

A reconciliation between the (provision) benefit for income taxes and the amount
computed by applying the federal statutory income tax rate to income (loss)
before income taxes and minority interests is as follows:

                                                                                              Year Ended December 31,
                                                                                        -----------------------------------
                                                                                            2000          1999         1998
- ---------------------------------------------------------------------------------------------------------------------------
Amount of federal income tax (provision) benefit based on the statutory rate            $  (8.9)      $  31.2      $   5.6
Revision of prior years' tax estimates and other changes in valuation allowances           (1.8)          1.1          8.3
Percentage depletion                                                                        3.0           2.8          3.2
Foreign taxes, net of federal tax benefit                                                  (3.2)         (3.2)        (1.9)
Other                                                                                       (.7)           .8          1.2
                                                                                        --------      --------     --------
(Provision) benefit for income taxes                                                    $ (11.6)      $  32.7      $  16.4
                                                                                        ========      ========     ========

The components of the Company's net deferred income tax assets are as follows:
                                                                           December 31,
                                                                   ----------------------------
                                                                       2000             1999
- -----------------------------------------------------------------------------------------------
Deferred income tax assets:
     Postretirement benefits other than pensions                   $     267.4       $    274.7
     Loss and credit carryforwards                                       125.2            119.3
     Other liabilities                                                   143.7            146.3
     Other                                                               181.5            193.9
     Valuation allowances                                               (122.3)          (125.6)
                                                                   ------------      -----------
         Total deferred income tax assets-net                            595.5            608.6
                                                                   ------------      -----------
Deferred income tax liabilities:
     Property, plant, and equipment                                     (105.1)          (101.6)
     Other                                                               (26.2)           (69.6)
                                                                   ------------      -----------
         Total deferred income tax liabilities                          (131.3)          (171.2)
                                                                   ------------      -----------
Net deferred income tax assets                                     $     464.2       $    437.4
                                                                   ============      ===========

The principal component of the Company's net deferred income tax assets is the
tax benefit, net of certain valuation allowances, associated with the accrued
liability for postretirement benefits other than pensions. The future tax
deductions with respect to the turnaround of this accrual will occur over a
30-to-40-year period. If such deductions create or increase a net operating
loss, the Company has the ability to carry forward such loss for 20 taxable
years. Accordingly, the Company believes that a long-term view of profitability
is appropriate and has concluded that this net deferred income tax asset will
more likely than not be realized.

A substantial portion of the valuation allowances provided by the Company
relates to loss and credit carryforwards. To determine the proper amount of
valuation allowances with respect to these carryforwards, the Company evaluated
all appropriate factors, including any limitations concerning their use and the
year the carryforwards expire, as well as the levels of taxable income necessary
for utilization. With regard to future levels of income, the Company believes,
based on the cyclical nature of its business, its history of operating earnings,
and its expectations for future years, that it will more likely than not
generate sufficient taxable income to realize the benefit attributable to the
loss and credit carryforwards for which valuation allowances were not provided.

As of December 31, 2000 and 1999, $56.0 and $39.1, respectively, of the net
deferred income tax assets listed above are included in the Consolidated Balance
Sheets in the caption entitled Prepaid expenses and other current assets.
Certain other portions of the deferred income tax liabilities listed above are
included in the Consolidated Balance Sheets in the captions entitled Other
accrued liabilities and Long-term liabilities.

The Company and its domestic subsidiaries file consolidated federal income tax
returns. During the period from October 28, 1988, through June 30, 1993, the
Company and its domestic subsidiaries were included in the consolidated federal
income tax returns of MAXXAM. The tax allocation agreements of the Company and
KACC with MAXXAM terminated pursuant to their terms, effective for taxable
periods beginning after June 30, 1993. However, payments or refunds for periods
prior to July 1, 1993 related to certain jurisdictions could still be required
pursuant to the Company's and KACC's respective tax allocation agreements with
MAXXAM. In accordance with the Credit Agreement, any such payments to MAXXAM by
KACC would require lender approval, except in certain specific circumstances.

At December 31, 2000, the Company had certain tax attributes available to offset
regular federal income tax requirements, subject to certain limitations,
including net operating loss and general business credit carryforwards of $84.9
and $1.0, respectively, which expire periodically through 2019 and 2011,
respectively, foreign tax credit ("FTC") carryforwards of $67.1, which expire
primarily in 2004 and 2005, and alternative minimum tax ("AMT") credit
carryforwards of $25.8, which have an indefinite life. The Company also has AMT
net operating loss and FTC carryforwards of $45.3 and $89.8, respectively,
available, subject to certain limitations, to offset future alternative minimum
taxable income, which expire periodically through 2019 and 2005, respectively.

10.  EMPLOYEE BENEFIT AND INCENTIVE PLANS

Pension and Other Postretirement Benefit Plans. Retirement plans are
non-contributory for salaried and hourly employees and generally provide for
benefits based on formulas which consider such items as length of service and
earnings during years of service. The Company's funding policies meet or exceed
all regulatory requirements.

The Company and its subsidiaries provide postretirement health care and life
insurance benefits to eligible retired employees and their dependents.
Substantially all employees may become eligible for those benefits if they reach
retirement age while still working for the Company or its subsidiaries. The
Company has not funded the liability for these benefits, which are expected to
be paid out of cash generated by operations. The Company reserves the right,
subject to applicable collective bargaining agreements, to amend or terminate
these benefits. Assumptions used to value obligations at year-end and to
determine the net periodic benefit cost in the subsequent year are:


                                                               Pension Benefits                  Medical/Life Benefits
                                                        --------------------------------    -------------------------------
                                                             2000        1999       1998         2000       1999       1998
                                                        --------------------------------    -------------------------------
Weighted-average assumptions as of December 31,
Discount rate                                               7.75%       7.75%      7.00%        7.75%      7.75%      7.00%
Expected return on plan assets                              9.50%       9.50%      9.50%          -          -          -
Rate of compensation increase                               4.00%       4.00%      5.00%        4.00%      4.00%      4.00%

In 2000, the average annual assumed rate of increase in the per capita cost of
covered benefits (i.e., health care cost trend rate) is 8.0% for all
participants. The assumed rate of increase is assumed to decline gradually to
5.0% in 2009 for all participants and remain at that level thereafter.

The following table presents the funded status of the Company's pension and
other postretirement benefit plans as of December 31, 2000 and 1999, and the
corresponding amounts that are included in the Company's Consolidated Balance
Sheets:

                                                               Pension Benefits                  Medical/Life Benefits
                                                       --------------------------------    --------------------------------
                                                            2000              1999              2000              1999
                                                       --------------    --------------    --------------     -------------
Change in Benefit Obligation:
     Obligation at beginning of year                   $       806.0     $       872.5     $       615.4      $      616.8
     Service cost                                               19.0              14.6               5.3               5.2
     Interest cost                                              60.5              59.7              45.0              41.5
     Currency exchange rate change                              -                 (5.7)               -                 -
     Curtailments, settlements and amendments                   33.7                .4             (33.4)               -
     Actuarial (gain) loss                                       9.1             (44.5)             79.5                .1
     Benefits paid                                             (92.5)            (91.0)            (53.6)            (48.2)
                                                       --------------    --------------    --------------     -------------
         Obligation at end of year                             835.8             806.0             658.2             615.4
                                                       --------------    --------------    --------------     -------------
Change in Plan Assets:
     FMV of plan assets at beginning of year                   857.8             801.8                -                 -
     Actual return on assets                                   (18.0)            133.0                -                 -
     Employer contributions                                     10.7              14.0              53.6              48.2
     Benefits paid                                             (92.5)            (91.0)            (53.6)            (48.2)
                                                       --------------    --------------    --------------     -------------
     FMV of plan assets at end of year                         758.0             857.8               -                 -
                                                       --------------    --------------    --------------     -------------
     Obligation in excess of (less than) plan
         assets                                                 77.8             (51.8)            658.2             615.4
     Unrecognized net actuarial gain (loss)                     25.1             131.9             (21.6)             56.7
     Unrecognized prior service costs                          (45.1)            (15.2)             78.3              57.7
     Adjustment required to recognize minimum liability          1.8               1.2                -                 -
     Intangible asset and other                                  3.0               2.6                -                 -
                                                       --------------    --------------    --------------     -------------
         Accrued benefit liability                     $        62.6     $        68.7     $       714.9      $      729.8
                                                       ==============    ==============    ==============     =============


The aggregate accumulated benefit obligation and fair value of plan assets for
pension plans with accumulated benefit obligation in excess of plan assets were
$789.3 and $748.5, respectively, as of December 31, 2000, and $92.4 and $79.7,
respectively, as of December 31, 1999.

                                                               Pension Benefits                  Medical/Life Benefits
                                                       ---------------------------------   --------------------------------
                                                          2000       1999        1998         2000       1999       1998
                                                       ---------- ----------- ----------   ---------- ---------- ----------
Components of Net Periodic Benefit Costs:
     Service cost                                      $    19.0  $     14.6  $    14.2    $     5.3  $     5.2  $     4.2
     Interest cost                                          60.5        59.7       59.7         45.0       41.5       37.5
     Expected return on assets                             (77.9)      (72.9)     (69.4)            -          -         -
     Amortization of prior service cost                      3.9         3.3        3.2        (12.8)     (12.1)     (12.4)
     Recognized net actuarial (gain) loss                   (1.9)         .7        1.4            -          -       (7.1)
                                                       ---------- ----------- ----------   ---------- ---------- ----------
     Net periodic benefit cost                               3.6         5.4        9.1         37.5       34.6       22.2
     Curtailments, settlements, etc.                          .1          .4        3.2            -          -          -
                                                       ---------- ----------- ----------   ---------- ---------- ----------
         Adjusted net periodic benefit costs           $     3.7  $      5.8  $    12.3    $    37.5  $    34.6  $    22.2
                                                       ========== =========== ==========   ========== ========== ==========

Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plan. A one-percentage- point change in assumed
health care cost trend rates would have the following effects:

                                                                       1% Increase           1% Decrease
                                                                      --------------        -------------
Increase (decrease) to total of service and interest cost             $        6.8          $       (5.0)
Increase (decrease) to the postretirement benefit obligation          $       68.3          $      (48.0)

Postemployment Benefits. The Company provides certain benefits to former or
inactive employees after employment but before retirement.

Incentive Plans. The Company has an unfunded incentive compensation program,
which provides incentive compensation based on performance against annual plans
and over rolling three-year periods. In addition, the Company has a
"nonqualified" stock option plan and KACC has a defined contribution plan for
salaried employees. The Company's expense for all of these plans was $5.7, $6.0
and $7.5 for the years ended December 31, 2000, 1999 and 1998, respectively.

Up to 8,000,000 shares of the Company's Common Stock were reserved for issuance
under its stock incentive compensation plans. At December 31, 2000, 1,861,752
shares of Common Stock remained available for issuance under those plans. Stock
options granted pursuant to the Company's nonqualified stock option program are
granted at or above the prevailing market price, generally vest at a rate of 20
- - 33% per year, and have a five or ten year term. Information concerning
nonqualified stock option plan activity is shown below. The weighted average
price per share for each year is shown parenthetically.


                                                                         2000          1999         1998
- ----------------------------------------------------------------------------------------------------------
Outstanding at beginning of year ($10.24, $9.98 and $10.45)          4,239,210     3,049,122      819,752
Granted ($10.23, $11.15 and $9.79)                                     757,335     1,218,068    2,263,170
Exercised ($7.25 in both years)                                           -           (7,920)     (10,640)
Expired or forfeited ($11.08, $11.02 and $9.60)                       (620,598)      (20,060)     (23,160)
                                                                     ----------    ----------   ----------
Outstanding at end of year ($10.24, $10.24 and $9.98)                4,375,947     4,239,210    3,049,122
                                                                     ==========    ==========   ==========
Exercisable at end of year ($10.18, $10.17 and $10.09)               2,380,491     1,763,852    1,261,262
                                                                     ==========    ==========   ==========

Options exercisable at December 31, 2000 had exercisable prices ranging from
$6.13 to $12.75 and a weighted average remaining contractual life of 3.4 years.

11.  MINORITY INTERESTS AND PLEDGED SHARES OF COMMON STOCK

Minority Interests. The Company owns a 90% interest in Volta Aluminium Company
Limited ("Valco") and a 65% interest in Alumina Partners of Jamaica ("Alpart").
These companies' financial statements are fully consolidated into the Company's
consolidated financial statements because they are majority-owned. Interests of
Alpart's and Valco's minority shareholders' (included in "Other" in the table
below) are included in minority interests together with KACC's Redeemable
Preference Stock and KACC's Preference Stock discussed below. Changes in
minority interest were:

                                             2000                           1999                           1998
                                   -------------------------     ----------------------    ---------------------------
                                     Redeemable                  Redeemable                  Redeemable
                                     Preference                  Preference                  Preference
                                          Stock      Other            Stock      Other          Stock        Other
- ----------------------------------------------------------------------------------------------------------------------
Beginning of period balance        $    19.5    $    98.2      $     20.1   $    103.4     $     27.7    $   100.0
Redeemable preference stock -
   Accretion                                -           -             1.0            -            1.1             -
   Stock redemption                     (2.0)         (.8)           (1.6)           -           (8.7)            -
   Reclassification (see below)        (17.5)           -              -             -             -              -
Minority interests                          -         3.7              -          (5.2)            -           3.4
                                   ----------   ----------     -----------  -----------    -----------   ----------
End of period balance              $        -   $   101.1      $     19.5   $     98.2     $     20.1    $   103.4
                                   ==========   ==========     ===========  ===========    ===========   ==========

In 1985, KACC issued its Cumulative (1985 Series A) Preference Stock and its
Cumulative (1985 Series B) Preference Stock (together, the "Redeemable
Preference Stock") each of which has a par value of $1 per share and a
liquidation and redemption value of $50 per share plus accrued dividends, if
any. No additional Redeemable Preference Stock is expected to be issued. In
connection with the USWA settlement agreement (see Note 5), during March 2001,
KACC redeemed all of the Redeemable Preference Stock (350,872 shares outstanding
at December 31, 2000). The amount applicable to the unredeemed shares at
December 31, 2000 ($17.5), was included in Other accrued liabilities. The net
cash impact of the redemption on KACC was only approximately $5.5 because
approximately $12.0 of the redemption amount had previously been funded into
redemption funds (included in Prepaid expenses).

KACC has four series of $100 par value Cumulative Convertible Preference Stock
("$100 Preference Stock") outstanding with annual dividend requirements of
between 41/8% and 4 3/4% (included in "Other" in the above table). KACC has the
option to redeem the $100 Preference Stock at par value plus accrued dividends.
KACC does not intend to issue any additional shares of the $100 Preference
Stock. The $100 Preference Stock can be exchanged for per share cash amounts
between $69 - $80. KACC records the $100 Preference Stock at their exchange
amounts for financial statement presentation and the Company includes such
amounts in minority interests. At December 31, 2000 and 1999, outstanding shares
of $100 Preference Stock were 9,250 and 19,538, respectively.

Pledged Shares. From time to time MAXXAM or certain of its subsidiaries which
own the Company's Common Stock may use such stock as collateral under various
financing arrangements. At December 31, 2000, 26,737,443 shares of the Company's
Common Stock beneficially owned by MAXXAM Group Holdings Inc. ("MGHI"), a wholly
owned subsidiary of MAXXAM, were pledged as security for $130.0 principal amount
of 12% Senior Secured Notes due 2003 issued in December 1996 by MGHI. An
additional 7,915,000 shares of the Company's Common Stock were pledged by MAXXAM
under a separate agreement under which $13.4 had been borrowed by MAXXAM at
December 31, 2000.

12.  COMMITMENTS AND CONTINGENCIES

Commitments. KACC has a variety of financial commitments, including purchase
agreements, tolling arrangements, forward foreign exchange and forward sales
contracts (see Note 13), letters of credit, and guarantees. Such purchase
agreements and tolling arrangements include long-term agreements for the
purchase and tolling of bauxite into alumina in Australia by QAL. These
obligations are scheduled to expire in 2008. Under the agreements, KACC is
unconditionally obligated to pay its proportional share of debt, operating
costs, and certain other costs of QAL. KACC's share of the aggregate minimum
amount of required future principal payments at December 31, 2000, is $101.5
which matures as follows: $14.1 in 2001, $43.0 in 2002 and $44.4 in 2003. KACC's
share of payments, including operating costs and certain other expenses under
the agreements, has ranged between $92.0 - $96.0 over the past three years. KACC
also has agreements to supply alumina to and to purchase aluminum from Anglesey.

Minimum rental commitments under operating leases at December 31, 2000, are as
follows: years ending December 31, 2001 - $36.5; 2002 - $32.3; 2003 - $29.4;
2004 - $26.9; 2005 - $26.4; thereafter - $78.0. The future minimum rentals
receivable under noncancelable subleases was $132.3 at December 31, 2000.

Rental expenses were $42.5, $41.1 and $34.5, for the years ended December 31,
2000, 1999 and 1998, respectively.

KACC has a long-term liability, net of estimated subleases income (included in
Long-term liabilities), on a building in which KACC has not maintained offices
for a number of years, but for which it is responsible for lease payments as
master tenant through 2008 under a sale-and-leaseback agreement. During 2000,
KACC reduced its net lease obligation by $17.0 (see Note 1) to reflect new
third-party sublease agreements which resulted in occupancy and lease rates
above those previously projected.

Environmental Contingencies. The Company and KACC are subject to a number of
environmental laws, to fines or penalties assessed for alleged breaches of the
environmental laws, and to claims and litigation based upon such laws. KACC
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. The following
table presents the changes in such accruals, which are primarily included in
Long-term liabilities, for the years ended December 31, 2000, 1999 and 1998:


                                                  2000        1999       1998
- -----------------------------------------------------------------------------
Balance at beginning of period                 $ 48.9      $ 50.7     $ 29.7
Additional accruals                               2.6         1.6       24.5
Less expenditures                                (5.4)       (3.4)      (3.5)
                                               -------     -------    -------
Balance at end of period                       $ 46.1      $ 48.9     $ 50.7
                                               =======     =======    =======

These environmental accruals represent the Company's estimate of costs
reasonably expected to be incurred based on presently enacted laws and
regulations, currently available facts, existing technology, and the Company's
assessment of the likely remediation action 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 $12.0 for the years 2001 through 2005 and an
aggregate of approximately $21.0 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 $35.0. 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 KACC has insurance coverage available to recover
certain incurred and future environmental costs and is pursuing claims in this
regard. During December 1998, KACC received recoveries totaling approximately
$35.0 from certain of its insurers related to current and future claims. Based
on the Company's analysis, a total of $12.0 of such recoveries was allocable to
previously accrued (expensed) items and, therefore, was reflected in earnings
during 1998 (see Note 1 - Other Income (Expense)). The remaining recoveries were
offset against increases in the total amount of environmental reserves. No
assurances can be given that the Company will be successful in other attempts to
recover incurred or future costs from other 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. KACC 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 KACC
or exposure to products containing asbestos produced or sold by KACC. The
lawsuits generally relate to products KACC has not sold for more than 20 years.

The following table presents the changes in number of such claims pending for
the years ended December 31, 2000, 1999 and 1998.

                                                                         2000         1999         1998
- --------------------------------------------------------------------------------------------------------
Number of claims at beginning of period                               100,000       86,400       77,400
Claims received                                                        30,600       29,300       22,900
Claims settled or dismissed                                           (19,800)     (15,700)     (13,900)
                                                                    ----------    ---------    ---------

Number of claims at end of period                                     110,800      100,000       86,400
                                                                    ==========    =========    =========
Number of claims at end of period (included above) covered by
     agreements under which KACC expects to settle over an
     extended period                                                   66,900       31,900       30,000
                                                                    ==========    =========    =========

The Company maintains a liability for estimated asbestos-related costs for
claims filed to date and an estimate of claims to be filed over a 10 year period
(i.e., through 2010). The Company's estimate is based on the Company's view, at
each balance sheet date, of the current and anticipated number of
asbestos-related claims, the timing and amounts of asbestos-related payments,
the status of ongoing litigation and settlement initiatives, and the advice of
Wharton Levin Ehrmantraut Klein & Nash, P.A., with respect to the current state
of the law related to asbestos claims. However, there are inherent uncertainties
involved in estimating asbestos- related costs and the Company's actual costs
could exceed the Company's estimates due to changes in facts and circumstances
after the date of each estimate. Further, while the Company does not presently
believe there is a reasonable basis for estimating asbestos-related costs beyond
2010 and, accordingly, no accrual has been recorded for any costs which may be
incurred beyond 2010, the Company expects that such costs are likely to continue
beyond 2010, and that such costs could be substantial.

The Company believes that KACC 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 and disputes with
certain carriers exist. 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. During 2000, KACC filed suit
against a group of its insurers, after negotiations with certain of the insurers
regarding an agreement covering both reimbursement amounts and the timing of
reimbursement payments were unsuccessful. The litigation is intended, among
other things, to: (1) ensure that the insurers provide KACC with timely and
appropriate reimbursement payments for asbestos-related settlements and related
legal costs incurred; and (2) to resolve certain issues between the parties with
respect to how specific provisions of the applicable insurance policies are to
be applied. Given the significance of expected asbestos-related payments in 2001
and 2002 based on settlement agreements in place at December 31, 2000, the
receipt of timely and appropriate reimbursements from such insurers is critical
to KACC's liquidity. The court is not expected to try the case until late 2001
or 2002. KACC is continuing to receive cash payments from the insurers.

The following tables present historical information regarding KACC's
asbestos-related balances and cash flows:

                                                                             December 31,
                                                                   ----------------------------
                                                                        2000            1999
- -----------------------------------------------------------------------------------------------
Liability (current portion of $130.0 and $53.0)                    $     492.4     $     387.8
Receivable (included in Other assets)(1)                                 406.3           315.5
                                                                   ------------    ------------
                                                                   $      86.1     $      72.3
                                                                   ============    ============

(1)  The asbestos-related receivable was determined on the same basis as the
     asbestos-related cost accrual. However, no assurances can be given that
     KACC 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 KACC's aggregate insurance
     coverage. As of December 31, 2000 and 1999, $36.9 and $25.0, respectively,
     of the receivable amounts relate to costs paid. The remaining receivable
     amounts relate to costs that are expected to be paid by KACC in the future.


                                                                         Year Ended December 31,
                                                               -------------------------------------------      Inception
                                                                   2000          1999            1998           To Date
                                                               -----------   -----------     -------------   ---------------
Payments made, including related legal costs................   $      99.5   $      24.6     $       18.5    $        220.5
Insurance recoveries........................................          62.8           6.6             19.9             131.3
                                                               -----------   -----------     -------------   ---------------
                                                               $      36.7   $      18.0     $       (1.4)   $         89.2
                                                               ===========   ===========     =============   ===============

                                                                                 As of December 31, 2000
                                                                -------------------------------------------------------
                                                                   2001 and              2003 to
                                                                     2002                 2005              Thereafter
                                                                ---------------       -------------       -------------
Expected annual payment amounts, before considering
   insurance recoveries.......................................  $110.0 - $135.0       $25.0 - $50.0           $125.0


Management continues to monitor claims activity, the status of lawsuits
(including settlement initiatives), legislative developments, and costs incurred
in order to ascertain whether an adjustment to the existing accruals should be
made to the extent that historical experience may differ significantly from the
Company's underlying assumptions. This process resulted in the Company
reflecting charges of $43.0, $53.2 and $12.7 (included in Other income(expense)
- - see Note 1) in the years ended December 31, 2000, 1999 and 1998, respectively,
for asbestos-related claims, net of expected insurance recoveries, based on
recent cost and other trends experienced by KACC and other companies. While
uncertainties are inherent in the final outcome of these asbestos matters and it
is presently impossible to determine the actual costs that ultimately may be
incurred and insurance recoveries that will be received, management currently
believes that, based on the factors discussed in the preceding paragraphs, the
resolution of asbestos-related uncertainties and the incurrence of
asbestos-related costs net of related insurance recoveries should not have a
material adverse effect on the Company's consolidated financial position or
liquidity. However, as the Company's estimates are periodically re-evaluated,
additional charges may be necessary and such charges could be material to the
results of the period in which they are recorded.

Labor Matters. In connection with the USWA strike and subsequent lock-out by
KACC, which was settled in September 2000, certain allegations of unfair labor
practices ("ULPs") were filed with the National Labor Relations Board ("NLRB")
by the USWA. As previously disclosed, KACC responded to all such allegations and
believes that they were without merit. Twenty-two of twenty-four allegations of
ULPs previously brought against KACC by the USWA have been dismissed. A trial
before an administrative law judge for the two remaining allegations commenced
in November 2000 and is continuing. The Company is unable to estimate when the
trial will be completed. Any outcome from the trial before the administrative
law judge would be subject to additional appeals by the general counsel of the
NLRB, the USWA or KACC. This process could take months or years. If these
proceedings eventually resulted in a final ruling against KACC with respect to
either allegation, it could be obligated to provide back pay to USWA members at
the five plants and such amount could be significant. The Company continues to
believe that the charges are without merit. While uncertainties are inherent in
matters such as this and it is presently impossible to determine the actual
costs, if any, that may ultimately arise in connection with this matter, the
Company does not believe that the ultimate outcome of this matter will have a
material adverse impact on the Company's liquidity or financial position.
However, amounts paid, if any, in satisfaction of this matter could be
significant to the results of the period in which they are recorded.

Other Contingencies. The Company or KACC is involved in various other claims,
lawsuits, and other proceedings relating to a wide variety of matters related to
past or present operations. 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.

13.   DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING PROGRAMS

In conducting its business, KACC uses various instruments, including forward
contracts and options, to manage the risks arising from fluctuations in aluminum
prices, energy prices and exchange rates. KACC enters into hedging transactions
to limit its exposure resulting from (1) its anticipated sales of alumina,
primary aluminum, and fabricated aluminum products, net of expected purchase
costs for items that fluctuate with aluminum prices, (2) the energy price risk
from fluctuating prices for natural gas, fuel oil and diesel oil used in its
production process, and (3) foreign currency requirements with respect to its
cash commitments with foreign subsidiaries and affiliates.

As KACC'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 (except the impact of those contracts discussed below
which have been marked to market) will generally offset at least a portion of
any losses or gains, respectively, on the transactions being hedged. See Note 1
for a discussion of the effects of the new accounting requirements under SFAS
No. 133, which will be used for reporting results beginning with the first
quarter of 2001. The following table summarizes KACC's derivative hedging
positions at December 31, 2000:

                                                                             Estimated %
                                                                              of Annual
                                                             Notional      Sales/Purchases     Carrying         Market
               Commodity                     Period           Amount           Hedged            Value           Value
- --------------------------------------  ----------------   -------------  ----------------   ------------    ------------
Aluminum (in tons) -
       Option contracts                       2001               362,000       82%(1)        $       18.2    $       3.1
       Option contracts                       2002               262,000       52%(1)                10.9           13.4
       Option contracts                       2003                42,000        9%(1)                 1.8            1.7

Natural gas (in MMBtus per day) -
       Option contracts and swaps         1/01 to 6/01            27,900         24%                  1.3           21.8

Australian dollars (A$ per year) -
       Forwards and option contracts          2001              A$ 160.0         80%                  1.4           (5.2)
       Option contracts                   2002 to 2005          A$  90.0         56%                 12.2           13.3

(1)  As of February 28, 2001, the estimated percentages of annual sales of
     primary aluminum (equivalents) hedged for 2001, 2002 and 2003 were 82%, 63%
     and 14%, respectively.

During late 1999 and early 2000, KACC also entered into a series of transactions
with a counterparty that provided KACC 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 January 2000 through June 2001. KACC also contracted
with the counterparty to receive certain fixed prices (also above the forward
market prices at the date of the transaction) on 4,000 tons of primary aluminum
per month over a three year period commencing October 2001, unless market prices
during certain periods decline below a stipulated "floor" price, in which case
the fixed price sales portion of the transactions terminate. The price at which
the October 2001 and after transactions terminate is well below current market
prices. While the Company believes that the October 2001 and after transactions
are consistent with its stated hedging objectives, these positions do not
qualify for treatment as a "hedge" under both pre-2001 and post-2001 accounting
guidelines. Accordingly, these positions are marked-to-market each period. See
Note 1 for mark-to-market pre-tax gains (losses) associated with the
transactions for the years ended December 31, 2000, 1999 and 1998.

As of December 31, 2000, KACC had sold forward approximately 100% and 80% of the
alumina available to it in excess of its projected internal smelting
requirements for 2001 and 2002, respectively, at prices indexed to future prices
of primary aluminum.

14.  SEGMENT AND GEOGRAPHICAL AREA INFORMATION

The Company's operations are located in many foreign countries, including
Australia, Canada, Ghana, Jamaica, and the United Kingdom. Foreign operations in
general may be more vulnerable than domestic operations due to a variety of
political and other risks. Sales and transfers among geographic areas are made
on a basis intended to reflect the market value of products.

The Company's operations are organized and managed by product type. The Company
operations include four operating segments of the aluminum industry and its
commodities marketing and corporate segments. The aluminum industry segments
include: Alumina and bauxite, Primary aluminum, Flat-rolled products and
Engineered products. The Alumina and bauxite business unit's principal products
are smelter grade alumina and chemical grade alumina hydrate, a value-added
product, for which the Company receives a premium over smelter grade market
prices. The Primary aluminum business unit produces commodity grade products as
well as value-added products such as rod and billet, for which the Company
receives a premium over normal commodity market prices. The Flat-rolled products
group sells value-added products such as heat treat aluminum sheet and plate
which are used in the aerospace and general engineering markets as well as
selling to the beverage container and specialty coil markets. The Engineered
products business unit serves a wide range of industrial segments including the
automotive, distribution, aerospace and general engineering markets. 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 Commodities marketing segment
includes the results of KACC's alumina and aluminum hedging activities (see Note
13). The accounting policies of the segments are the same as those described in
Note 1. Business unit results are evaluated internally by management before any
allocation of corporate overhead and without any charge for income taxes,
interest expense or non- recurring charges.

Financial information by operating segment at December 31, 2000, 1999 and 1998
is as follows:

                                                                             Year Ended December 31,
                                                                    ----------------------------------------
                                                                       2000           1999           1998
- ------------------------------------------------------------------------------------------------------------
Net Sales:(3)
   Bauxite and Alumina:(1)(4)
     Net sales to unaffiliated customers                            $   442.2     $    395.8     $    445.2
     Intersegment sales                                                 148.3          129.0          135.8
                                                                    ----------    -----------    -----------
                                                                        590.5          524.8          581.0
                                                                    ----------    -----------    -----------
   Primary Aluminum:(2)(4)
     Net sales to unaffiliated customers                                563.7          432.9          390.7
     Intersegment sales                                                 242.3          240.6          233.5
                                                                    ----------    -----------    -----------
                                                                        806.0          673.5          624.2
                                                                    ----------    -----------    -----------
   Flat-Rolled Products                                                 521.0          591.3          732.7
   Engineered Products                                                  564.9          556.8          595.3
   Commodities Marketing(4)                                             (25.4)          18.3           60.5
   Minority Interests                                                   103.4           88.5           78.0
   Eliminations                                                        (390.6)        (369.6)        (369.3)
                                                                    ----------    -----------    -----------
                                                                    $ 2,169.8     $  2,083.6     $  2,302.4
                                                                    ==========    ===========    ===========
Equity in income (loss) of unconsolidated affiliates:
   Bauxite and Alumina                                              $    (8.4)    $      3.4     $     (3.2)
   Primary Aluminum                                                       3.6           (1.0)           1.2
   Engineered Products and Other                                            -            2.5            7.4
                                                                    ----------    -----------    -----------
                                                                    $    (4.8)    $      4.9     $      5.4
                                                                    ==========    ===========    ===========
Operating income (loss):(4)(6)
   Bauxite and Alumina - Note 2                                     $    57.2     $    (10.5)    $      5.5
   Primary Aluminum (5)                                                 100.1           (4.8)          28.3
   Flat-Rolled Products                                                  16.6           17.1           86.8
   Engineered Products                                                   34.1           38.6           51.5
   Commodities Marketing(4)                                             (48.7)          21.3           98.1
   Micromill                                                              (.6)         (11.6)         (18.4)
   Eliminations                                                            .1            6.9            8.9
   Corporate and Other                                                  (61.4)         (61.8)         (65.1)
   Labor Settlement and Other Non-Recurring Operating Items,
        Net - Notes 5 and 6                                              41.9          (24.1)        (105.0)
                                                                    ----------    -----------    -----------
                                                                    $   139.3     $    (28.9)    $     90.6
                                                                    ==========    ===========    ===========


                                                                            Year Ended December 31,
                                                                   ----------------------------------------
                                                                      2000          1999           1998
- -----------------------------------------------------------------------------------------------------------
Depreciation and amortization:
   Bauxite and Alumina - Note 2                                    $    22.2     $     29.7     $     36.4
   Primary Aluminum                                                     24.8           27.8           29.9
   Flat-Rolled Products                                                 16.7           16.2           16.1
   Engineered Products                                                  11.5           10.7           10.8
   Corporate and Other (includes Micromill in 1999 and 1998)             1.7            5.1            5.9
                                                                   ----------    -----------    -----------
                                                                   $    76.9     $     89.5     $     99.1
                                                                   ==========    ===========    ===========
Capital expenditures:
   Bauxite and Alumina - Note 2                                    $   254.6     $     30.4     $     26.9
   Primary Aluminum                                                      9.6           12.8           20.7
   Flat-Rolled Products                                                  7.6           16.6           20.4
   Engineered Products - Note 4                                         23.6            7.8            8.4
   Corporate and Other                                                   1.1             .8            1.2
                                                                   ----------    -----------    -----------
                                                                   $   296.5     $     68.4     $     77.6
                                                                   ==========    ===========    ===========

(1)  Net sales for 2000 and 1999, included approximately 267,000 tons and
     264,000 tons, respectively of alumina purchased from third parties and
     resold to certain unaffiliated customers of the Gramercy facility and
     55,000 tons and 131,000 tons, respectively, of alumina purchased from third
     parties and transferred to the Company's Primary aluminum business unit.
(2)  Net sales for 2000, 1999 and 1998 included approximately 206,500 tons,
     260,100 tons and 251,300 tons, respectively, of primary aluminum purchased
     from third parties to meet third-party and internal commitments.
(3)  Net sales for 1999 and 1998 for all segments have been restated to conform
     to a new accounting requirement which states that freight charges should be
     included in cost of products sold rather than netted against net sales as
     was the Company's prior policy.
(4)  Net sales and operating income (loss) for Bauxite and alumina and Primary
     aluminum segments for 1999 and 1998 have been restated to reflect a change
     in the Company's segment reporting. The results of the Company's metal
     hedging activities in the Commodities marketing segment are now set out
     separately rather than being allocated between the two commodity business
     units.
(5)  Operating income (loss) for 1999 included potline preparation and restart
     costs of $12.8.
(6)  The allocation of the labor settlement charge to the Company's business
     units for the year ended December 31, 2000, is as follows: Bauxite and
     Alumina - $2.1, Primary aluminum - $15.9, Flat-rolled products - $18.2 and
     Engineered products - $2.3.

                                                                                 December 31,
                                                                          -------------------------
                                                                               2000         1999
- ---------------------------------------------------------------------------------------------------
Investments in and advances to unconsolidated affiliates:
   Bauxite and Alumina                                                    $     56.0     $     71.6
   Primary Aluminum                                                             19.0           25.3
   Corporate and Other                                                           2.8            -
                                                                          ----------     ----------
                                                                          $     77.8     $     96.9
                                                                          ==========     ==========

                                                                            December 31,
                                                                  --------------------------
                                                                       2000            1999
- --------------------------------------------------------------------------------------------
Segment assets:
   Bauxite and Alumina                                            $     957.0     $    777.7
   Primary Aluminum                                                     623.3          560.8
   Flat-Rolled Products                                                 337.7          423.2
   Engineered Products                                                  232.9          253.1
   Commodities Marketing                                                 62.1           99.0
   Corporate and Other (includes Micromill in 1999)                   1,130.1        1,085.0
                                                                  -----------     ----------
                                                                  $   3,343.1     $  3,198.8
                                                                  ===========     ==========

Geographical information for net sales, based on country of origin, and
long-lived assets follows:

                                                               Year Ended December 31,
                                                    ---------------------------------------------
                                                        2000            1999             1998
- -------------------------------------------------------------------------------------------------
Net sales to unaffiliated customers:
     United  States                                 $    1,350.1    $     1,439.6    $    1,744.0
     Jamaica                                               298.5            233.1           237.0
     Ghana                                                 237.5            153.2            89.8
     Other Foreign                                         283.7            257.7           231.6
                                                    ------------    -------------    ------------
                                                    $    2,169.8    $     2,083.6    $    2,302.4
                                                    ============    =============    ============

                                                      December 31,
                                              -----------------------------
                                                  2000             1999
- ---------------------------------------------------------------------------
Long-lived assets: (1)
     United States                            $       809.0    $      688.1
     Jamaica                                          290.3           288.2
     Ghana                                             80.8            84.1
     Other Foreign                                     73.8            90.2
                                              -------------    ------------
                                              $     1,253.9    $    1,150.6
                                              =============    ============

(1) Long-lived assets include Property, plant, and equipment, net and
    Investments in and advances to unconsolidated affiliates.

The aggregate foreign currency gain included in determining net income was
immaterial for the years ended December 31, 2000, 1999 and 1998. No single
customer accounted for sales in excess of 10% of total revenue in 2000, 1999 and
1998. Export sales were less than 10% of total revenue during the years ended
December 31, 2000, 1999 and 1998.

QUARTERLY FINANCIAL DATA (UNAUDITED)
- --------------------------------------------------------------------------------


                                                                           Quarter Ended
                                                     ------------------------------------------------------------
(In millions of dollars, except share amounts)        March 31,     June 30,    September 30,     December 31,
- -----------------------------------------------------------------------------------------------------------------

2000
   Net sales                                         $   575.7 (8)  $  552.8 (8)    $ 545.2 (8)      $ 496.1
   Operating income                                       36.9          51.5            2.8             48.1
   Net income (loss)                                      11.7 (1)      11.0 (2)      (16.8)(3)         10.9 (4)
   Basic/Diluted Earnings (loss) per share                 .15 (1)       .14 (2)       (.21)(3)          .14 (4)
   Common stock market price:
      High                                                8.88          5.13           6.06             5.94
      Low                                                 4.13          2.94           3.50             3.50
1999
   Net sales                                         $   490.3 (8)  $  536.2 (8)    $ 528.7 (8)      $ 528.4 (8)
   Operating income (loss)                               (33.0)           .7          (12.1)            15.5
   Net income (loss)                                     (38.2)        (15.7)         (39.2)(5)         39.0 (6)
   Basic/Diluted Earnings (loss) per share                (.48)         (.20)          (.49)(5)          .49
   Common stock market price:
      High                                                6.94         10.13           9.69             8.25
      Low                                                 4.75          5.00           6.63             6.00
1998
   Net sales                                         $   609.6 (8)  $  626.8(8)    $  552.9 (8)      $  513.1(8)
   Operating income (loss)                                44.8          55.3           30.8            (40.3)
   Net income (loss)                                      12.0          16.7           10.8            (38.9)(7)
   Basic/Diluted Earnings (loss) per share                 .15           .21            .14             (.49)(7)
   Common stock market price:
      High                                               11.00         11.63           9.63             7.75
      Low                                                 8.13          8.88           5.63             4.63

(1)   Includes a pre-tax gain of $14.4 to reflect a mark-to-market adjustment on
      certain primary aluminum hedging transactions. Excluding this item, basic
      income per share would have been approximately $.04.
(2)   Includes a pre-tax gain of $15.8 from the sale of power offset by a
      pre-tax charge of $6.0 to reflect a mark-to-market adjustment on certain
      primary aluminum hedging transactions and a pre-tax charge of $2.0 for
      certain severance and relocation costs associated with Corporate
      restructuring initiatives and product line exit. Excluding these items,
      basic income per share would have been approximately $.09.
(3)   Includes a pre-tax labor settlement charge of $38.5, a non-cash pre-tax
      charge of $43.0 for asbestos-related claims, a pre-tax charge of $11.5 for
      incremental maintenance spending and pre-tax charges of $18.1 for
      non-recurring impairment and restructuring charges offset by a pre-tax
      gain of $40.5 from the sale of power, pre-tax gains of $39.0 related to
      real estate transactions and a pre-tax gain of $.9 to reflect a
      mark-to-market adjustment on certain primary aluminum hedging
      transactions. Excluding these items, basic income per share would have
      been approximately $.03.
(4)   Includes a pre-tax gain of $103.2 from the sale of power and a pre-tax
      gain of $1.4 to reflect a mark-to-market adjustment on certain primary
      aluminum hedging transactions offset by a non-cash impairment loss of
      approximately $33.0, a LIFO inventory charge of $7.0 and a pre-tax charge
      of $5.3 for other non-recurring impairment and restructuring charges.
      Excluding these items, but giving effect to operating profit foregone as a
      result of these power sales, basic loss per share would have been
      approximately $.19.
(5)   Includes a non-cash pre-tax charge of $19.1 to reduce the carrying value
      of the Company's Micromill assets, a non-cash pre-tax charge of $15.2 for
      asbestos-related claims and a pre-tax charge of $5.9 to reflect a
      mark-to-market adjustment on certain primary aluminum hedging
      transactions. Excluding these items, basic loss per share would have been
      approximately $.16.
(6)   Includes a pre-tax gain of $85.0 on involuntary conversion at Gramercy
      facility. See Note 2.  Excluding this item, basic loss per share would
      have been $.22.
(7)   Includes an unfavorable pre-tax strike-related gross profit impact of
      approximately $50.0, and a non-cash pre-tax charge of $45.0 related to
      impairment of the Company's Micromill assets. Excluding these items, basic
      earnings per share would have been approximately $.29.
(8)   Net sales for the quarterly periods prior to the quarter ended December
      31, 2000 have been restated to conform to a new accounting principle
      that requires freight charges to be included in cost of products sold.


FIVE-YEAR FINANCIAL DATA
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------

                                                                                       December 31,
                                                               ------------------------------------------------------------
(In millions of dollars)                                              2000        1999        1998         1997        1996
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
   Cash and cash equivalents                                   $     23.4  $     21.2   $    98.3   $     15.8   $    81.3
   Receivables                                                      429.8       261.0       282.7        340.2       252.4
   Inventories                                                      396.2       546.1       543.5        568.3       562.2
   Prepaid expenses and other current assets                        162.7       145.6       105.5        121.3       127.8
                                                               ----------- -----------  ----------  -----------  ----------
      Total current assets                                        1,012.1       973.9     1,030.0      1,045.6     1,023.7

Investments in and advances to unconsolidated affiliates             77.8        96.9       128.3        148.6       168.4
Property, plant, and equipment - net                              1,176.1     1,053.7     1,108.7      1,171.8     1,168.7
Deferred income taxes                                               454.2       440.0       377.9        330.6       264.5
Other assets                                                        622.9       634.3       346.0        317.3       308.7
                                                               ----------- -----------  ----------  -----------  ----------
      Total                                                    $  3,343.1  $  3,198.8   $ 2,990.9   $  3,013.9   $ 2,934.0
                                                               =========== ===========  ==========  ===========  ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accruals                               $    673.5  $    500.3   $   432.7   $    457.3   $   453.4
   Accrued postretirement medical benefit obligation -
      current portion                                                58.0        51.5        48.2         45.3        50.1
   Payable to affiliates                                             78.3        85.8        77.1         82.7        97.0
   Long-term debt - current portion                                  31.6          .3          .4          8.8         8.9
                                                               ----------- -----------  ----------  -----------  ----------
      Total current liabilities                                     841.4       637.9       558.4        594.1       609.4

Long-term liabilities                                               703.7       727.1       532.9        491.9       458.1
Accrued postretirement medical benefit obligation                   656.9       678.3       694.3        720.3       722.5
Long-term debt                                                      957.8       972.5       962.6        962.9       953.0
Minority interests                                                  101.1       117.7       123.5        127.7       121.7

Stockholders' equity:
   Preferred stock                                                    -           -            -           -            .4
   Common stock                                                        .8          .8          .8           .8          .7
   Additional capital                                               537.5       536.8       535.4        533.8       531.1
   Retained earnings (accumulated deficit)                         (454.3)     (471.1)     (417.0)      (417.6)     (460.1)
   Accumulated other comprehensive income (loss)                     (1.8)       (1.2)         -           -          (2.8)
                                                               ----------- -----------  ----------  -----------  ----------
      Total stockholders' equity                                     82.2        65.3       119.2        117.0        69.3
                                                               ----------- -----------  ----------  -----------  ----------
      Total                                                    $  3,343.1  $  3,198.8   $ 2,990.9   $  3,013.9   $ 2,934.0
                                                               =========== ===========  ==========  ===========  ==========

Debt-to-capital ratio(1)                                             81.2        81.2        76.9         77.8        81.2


(1)   Total of long-term debt - current portion and long-term debt (collectively
      "total debt") as a ratio of total debt, deferred income tax liabilities,
      minority interests, and stockholders' equity.


FIVE-YEAR FINANCIAL DATA
STATEMENTS OF CONSOLIDATED INCOME (LOSS)
- --------------------------------------------------------------------------------

                                                                            Year Ended December 31,
                                                       -----------------------------------------------------------------------------
(In millions of dollars, except share amounts)                 2000          1999         1998            1997         1996
- ------------------------------------------------------------------------------------------------------------------------------------
Net sales                                              $   2,169.8    $  2,083.6 (1)  $  2,302.4 (1)  $  2,423.3 (1)  $  2,238.8 (1)
                                                       ------------   --------------  --------------  --------------  --------------


Costs and expenses:
   Cost of products sold                                   1,891.4       1,893.5 (1)     1,892.2 (1)     2,001.3 (1)     1,905.8 (1)
   Depreciation and amortization                              76.9          89.5            99.1           102.5           107.6
   Selling, administrative, research and development,
     and general                                             104.1         105.4           115.5           131.8           127.6
   Labor settlement charge                                    38.5           -               -               -               -
   Other non-recurring operating items, net                  (80.4)         24.1           105.0            19.7             -
                                                       ------------   --------------  --------------  --------------  --------------
     Total costs and expenses                              2,030.5       2,112.5         2,211.8         2,255.3         2,141.0
                                                       ------------   --------------  --------------  --------------  --------------

Operating income (loss)                                      139.3         (28.9)           90.6           168.0            97.8

Other income (expense):
   Interest expense                                         (109.6)       (110.1)         (110.0)         (110.7)          (93.4)
   Gain on involuntary conversion at Gramercy facility       -              85.0             -               -               -
   Other - net                                                (4.3)        (35.9)            3.5             3.0            (2.7)
                                                       ------------   --------------  --------------  --------------  --------------

Income (loss) before income taxes, minority interests         25.4         (89.9)          (15.9)           60.3             1.7

(Provision) benefit for income taxes                         (11.6)         32.7            16.4            (8.8)            9.3

Minority interests                                             3.0           3.1              .1            (3.5)           (2.8)
                                                       ------------   --------------  --------------  --------------  --------------

Net income (loss)                                             16.8         (54.1)             .6            48.0             8.2

Preferred stock dividends                                      -             -               -              (5.5)           (8.4)
                                                       ------------   --------------  --------------  --------------  --------------

Net income (loss) available to common shareholders     $      16.8    $    (54.1)     $       .6      $     42.5      $      (.2)
                                                       ============   ==============  ==============  ==============  ==============
Earnings (loss) per share:
   Basic/Diluted                                       $       .21    $     (.68)     $      .01      $      .57      $       -
                                                       ============   ==============  ==============  ==============  ==============

Dividends per common share                             $        -     $       -       $       -       $       -       $       -
                                                       ============   ==============  ==============  ==============  ==============
Weighted average shares outstanding (000):
   Basic                                                    79,520        79,336          79,115          74,221          71,644

   Diluted                                                  79,523        79,336          79,156          74,382          71,644


(1)  Net sales and cost of products sold for prior years have been restated to
     conform to a new accounting principle that requires freight charges ($39.3
     in 1999, $46.0 in 1998, $50.1 in 1997 and $48.3 in 1996) to be included in
     cost of products sold.


ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
              DISCLOSURE

None.

PART III

Information required under PART III (Items 10, 11, 12 and 13) has been omitted
from this Report since the Company intends to file with the Securities and
Exchange Commission, not later than 120 days after the close of its fiscal year,
a definitive proxy statement pursuant to Regulation 14A which involves the
election of directors, and such information is incorporated by reference from
such definitive proxy statement.

PART IV

ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)           INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

              1.  Financial Statements

              Report of Independent Public Accountants

              Consolidated Balance Sheets

              Statements of Consolidated Income (Loss)

              Statements of Consolidated Stockholders' Equity and
                  Comprehensive Income (Loss)

              Statements of Consolidated Cash Flows

              Notes to Consolidated Financial Statements

              Quarterly Financial Data (Unaudited)

              Five-Year Financial Data


              2.  Financial Statement Schedules

                  Report of Independent Public Accountants

                  Schedule I     -   Condensed Balance Sheets - Parent Company,
                                     Condensed Statements of Income - Parent Company,
                                     Condensed Statements of Cash Flows - Parent Company, and
                                     Notes to Condensed Financial Statements - Parent Company

                  All other schedules are inapplicable or the required
                  information is included in the Consolidated Financial
                  Statements or the Notes thereto.


              3.  Exhibits

                  Reference is made to the Index of Exhibits immediately
                  preceding the exhibits hereto (beginning on page 71), which
                  index is incorporated herein by reference.

(b)           REPORTS ON FORM 8-K

              No Report on Form 8-K was filed by the Company during the last
              quarter of the period covered by this Report.

(c)           EXHIBITS

              Reference is made to the Index of Exhibits immediately preceding
              the exhibits hereto (beginning on page 71), which index is
              incorporated herein by reference.


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

We have audited in accordance with auditing standards generally accepted in the
United States, the financial statements included in Kaiser Aluminum Corporation
and Subsidiary Companies' annual report to shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated March 27,
2001. Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule I listed in the index at Item
14(a)2. above is the responsibility of the Company's management and is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not a required part of the basic financial statements. This schedule has
been subjected to the auditing procedures applied in our audit of the basic
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.



ARTHUR ANDERSEN LLP



Houston, Texas
March 27, 2001


                                   SCHEDULE I
                    CONDENSED BALANCE SHEETS - PARENT COMPANY

                 (In millions of dollars, except share amounts)



                                                                                         December 31,
                                                                                  -------------------------
                                                                                       2000          1999
                                                                                  -----------    ----------
ASSETS
Investment in KACC                                                                $  2,122.2     $ 1,978.2
                                                                                  -----------    ----------
        Total                                                                     $  2,122.2     $ 1,978.2
                                                                                  ===========    ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities                                                               $     -        $     -

Intercompany note payable to KACC, including accrued interest                        2,040.0       1,912.9

Stockholders' equity:
   Common stock, par value $.01, authorized 125,000,000 shares; issued and
      outstanding 79,599,557 and 79,405,333                                               .8            .8
   Additional capital                                                                  537.5         536.8
   Accumulated deficit                                                                (454.3)       (471.1)
   Accumulated other comprehensive income (loss)                                        (1.8)         (1.2)
                                                                                  -----------    ----------
        Total stockholders' equity                                                      82.2          65.3
                                                                                  -----------    ----------
        Total                                                                     $  2,122.2     $ 1,978.2
                                                                                  ===========    ==========


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


                                   SCHEDULE I
             CONDENSED STATEMENTS OF INCOME (LOSS) - PARENT COMPANY

                            (In millions of dollars)

                                                                  December 31,
                                                    -----------------------------------------
                                                       2000            1999            1998
                                                    ---------       ---------       ---------
Equity in income of KACC                            $  144.3        $   65.1        $  112.5

Administrative and general expense                       (.4)            (.3)            (.4)

Interest expense                                      (127.1)         (118.9)         (111.5)
                                                    ---------       ---------       ---------
Net income (loss)                                   $   16.8        $  (54.1)       $     .6
                                                    =========       =========       =========


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


                                   SCHEDULE I
               CONDENSED STATEMENTS OF CASH FLOWS - PARENT COMPANY

                            (In millions of dollars)

                                                                                                December 31,
                                                                                 ------------------------------------------
                                                                                     2000            1999           1998
                                                                                 -----------     -----------     ----------
Cash flows from operating activities:
   Net income (loss)                                                             $     16.8      $    (54.1)     $      .6
   Adjustments to reconcile net income to net cash used for operating
        activities:
        Equity in income of KACC                                                     (144.3)          (65.1)        (112.5)
        Accrued interest on intercompany note payable to KACC                         127.1           118.9          111.5
        Accrued taxes paid                                                             -               -              (3.3)
                                                                                 -----------     -----------     ----------
           Net cash used by operating activities                                        (.4)            (.3)          (3.7)
                                                                                 -----------     -----------     ----------
Cash flows from investing activities:
   Investment in KACC                                                                  -                (.1)           (.1)
                                                                                 -----------     -----------     ----------
           Net cash used by investing activities                                       -                (.1)           (.1)
                                                                                 -----------     -----------     ----------
Cash flows from financing activities:
   Capital stock issued                                                                -                 .1             .1
   Tax allocation payments from KACC                                                   -               -               3.3
   Operating cost advances from KACC                                                    .4               .3             .4
                                                                                 -----------     -----------     ----------
           Net cash provided by financing activities                                    .4               .4            3.8
                                                                                 -----------     -----------     ----------


Net (decrease) increase in cash and cash equivalents during the year                   -               -               -
Cash and cash equivalents at beginning of year                                         -               -               -
                                                                                 -----------     -----------     ----------
Cash and cash equivalents at end of year                                         $     -         $     -         $     -
                                                                                 ===========     ===========     ==========
Supplemental disclosure of non-cash investing activities:
   Non-cash (decrease) increase in investment in KACC                            $     -         $      (.1)     $    (1.7)


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


                                   SCHEDULE I
            NOTES TO CONDENSED FINANCIAL STATEMENTS - PARENT COMPANY


1. BASIS OF PRESENTATION

   Kaiser Aluminum Corporation (the " Company") is a holding company and
   conducts its operations through its wholly owned subsidiary, Kaiser Aluminum
   & Chemical Corporation ("KACC"), which is reported herein using the equity
   method of accounting. The accompanying parent company condensed financial
   statements of the Company should be read in conjunction with the 2000
   consolidated financial statements of Kaiser Aluminum Corporation and
   Subsidiary Companies ("Kaiser").


2. INTERCOMPANY NOTE PAYABLE

   The Intercompany Note to KACC, as amended, provides for a fixed interest rate
   of 65/8% and matures on December 21, 2020. Interest and principal payments
   are payable over a 15-year term pursuant to a predetermined schedule starting
   December 21, 2006.


3. RESTRICTED NET ASSETS

   The investment in KACC is substantially unavailable to the Company pursuant
   to the terms of certain debt instruments. The obligations of KACC in respect
   of the credit facilities under the Credit Agreement are guaranteed by the
   Company and by certain significant subsidiaries of KACC. See Note 8 of Notes
   to Kaiser's Consolidated Financial Statements.


4. LIQUIDITY/CAPITAL RESOURCES

   KACC has significant near-term debt maturities. KACC's ability to make
   payments on and refinance its debt depends on its ability to generate cash in
   the future. In addition to being impacted by power sales and normal operating
   items, the Company's and KACC's near-term liquidity and cash flows will also
   be affected by the Gramercy incident, net payments for asbestos- related
   liabilities and possible proceeds from asset dispositions. For discussions of
   these matters, see Notes 2, 7, 8 and 12 of Notes to Kaiser's Consolidated
   Financial Statements.


                                   SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) 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.


                                          KAISER ALUMINUM CORPORATION

       Date:  March 27, 2001       By        /S/ Raymond J. Milchovich
                                   ---------------------------------------------
                                            Raymond J. Milchovich
                                     President, Chief Executive Officer
                                               and Director

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

                                             /S/ Raymond J. Milchovich
       Date:  March 27, 2001       ---------------------------------------------
                                            Raymond J. Milchovich
                                      President, Chief Executive Officer
                                                 and Director
                                       (Principal Executive Officer)

       Date:  March 27, 2001                 /S/ John T. La Duc
                                   ---------------------------------------------
                                              John T. La Duc
                                     Executive Vice President and
                                        Chief Financial Officer
                                     (Principal Financial Officer)


       Date:  March 27, 2001                 /S/ Daniel D. Maddox
                                   ---------------------------------------------
                                                Daniel D. Maddox
                                        Vice President and Controller
                                       (Principal Accounting Officer)

       Date:  March 27, 2001                 /S/ George T. Haymaker, Jr.
                                   ---------------------------------------------
                                               George T. Haymaker, Jr.
                                                Chairman of the Board

       Date:  March 27, 2001                 /S/ Robert J. Cruikshank
                                   ---------------------------------------------
                                               Robert J. Cruikshank
                                                      Director

       Date:  March 27, 2001                 /S/ James T. Hackett
                                   ---------------------------------------------
                                               James T. Hackett
                                                   Director

       Date:  March 27, 2001                 /S/ Charles E. Hurwitz
                                   ---------------------------------------------
                                               Charles E. Hurwitz
                                                    Director

       Date:  March 27, 2001                 /S/ Ezra G. Levin
                                   ---------------------------------------------
                                               Ezra G. Levin
                                                 Director

       Date:  March 27, 2001                 /S/ James D. Woods
                                   ---------------------------------------------
                                              James D. Woods
                                                 Director


                                INDEX OF EXHIBITS

Exhibit
Number                            Description
- -------                           -----------
 3.1            Restated Certificate of Incorporation of Kaiser Aluminum
                Corporation ("KAC"), dated February 18, 2000 (incorporated by
                reference to Exhibit 3.1 to the Report on Form 10-K for the
                period ended December 31, 1999, filed by KAC, File No. 1-9447).

 3.2            Certificate of Retirement of KAC, dated October 24, 1995
                (incorporated by reference to Exhibit 3.2 to the Report
                on Form 10-K for the period ended December 31, 1995, filed by
                KAC, File No. 1-9447).

 3.3            Certificate of Retirement of KAC, dated February 12, 1998
                (incorporated by reference to Exhibit 3.3 to the Report
                on From 10-K for the period ended December 31, 1997, filed by
                KAC, File No. 1-9447).

 3.4            Certificate of Elimination of KAC, dated July 1, 1998
                (incorporated by reference to Exhibit 3.4 to the Report on
                Form 10-Q for the quarterly period ended June 30, 1999, filed by
                KAC, File No. 1-9447).

 3.5            Certificate of Amendment of the Restated Certificate of
                Incorporation of KAC, dated January 10, 2000 (incorporated by
                reference to Exhibit 3.5 to the Report on Form 10-K for the
                period ended December 31, 1999, filed by KAC, File No. 1-9447).

 3.6            Amended and Restated By-Laws of KAC, dated October 1, 1997
                (incorporated by reference to Exhibit 3.3 to the Report on Form
                10-Q for the quarterly period ended September 30, 1997, filed by
                KAC, File No. 1-9447).

 4.1            Indenture, dated as of February 1, 1993, among Kaiser Aluminum &
                Chemical Corporation ("KACC"), as Issuer, Kaiser Alumina
                Australia Corporation, Alpart Jamaica Inc., and Kaiser Jamaica
                Corporation, as Subsidiary Guarantors, and The First National
                Bank of Boston, as Trustee, regarding KACC's 12 3/4% Senior
                Subordinated Notes Due 2003 (incorporated by reference to
                Exhibit 4.1 to Form 10-K for the period ended December 31, 1992,
                filed by KACC, File No. 1-3605).

 4.2            First Supplemental Indenture, dated as of May 1, 1993, to the
                Indenture, dated as of February 1, 1993 (incorporated by
                reference to Exhibit 4.2 to the Report on Form 10-Q for the
                quarterly period ended June 30, 1993, filed by KACC, File
                No. 1-3605).

 4.3            Second Supplemental Indenture, dated as of February 1, 1996, to
                the Indenture, dated as of February 1, 1993 (incorporated by
                reference to Exhibit 4.3 to the Report on Form 10-K for the
                period ended December 31, 1995, filed by KAC, File No. 1-9447).

 4.4            Third Supplemental Indenture, dated as of July 15, 1997, to the
                Indenture, dated as of February 1, 1993 (incorporated by
                reference to Exhibit 4.1 to the Report on Form 10-Q for the
                quarterly period ended June 30, 1997, filed by KAC, File
                No. 1-9447).

 4.5            Fourth Supplemental Indenture, dated as of March 31, 1999, to
                the Indenture, dated as of February 1, 1993, (incorporated by
                reference to Exhibit 4.1 to the Report on Form 10-Q for the
                quarterly period ended March 31, 1999, filed by KAC, File
                No. 1-9447).

 4.6            Indenture, dated as of February 17, 1994, among KACC, as Issuer,
                Kaiser Alumina Australia Corporation, Alpart Jamaica Inc.,
                Kaiser Jamaica Corporation, and Kaiser Finance Corporation, as
                Subsidiary Guarantors, and First Trust National Association, as
                Trustee, regarding KACC's 97/8% Senior Notes Due 2002
                (incorporated by reference to Exhibit 4.3 to the Report on Form
                10-K for the period ended December 31, 1993, filed by KAC, File
                No. 1-9447).

 4.7            First Supplemental Indenture, dated as of February 1, 1996, to
                the Indenture, dated as of February 17, 1994 (incorporated by
                reference to Exhibit 4.5 to the Report on Form 10-K for the
                period ended December 31, 1995, filed by KAC, File No. 1-9447).

 4.8            Second Supplemental Indenture, dated as of July 15, 1997, to the
                Indenture, dated as of February 17, 1994 (incorporated by
                reference to Exhibit 4.2 to the Report on Form 10-Q for the
                quarterly period ended June 30, 1997, filed by KAC, File No.
                1-9447).

 4.9            Third Supplemental Indenture, dated as of March 31, 1999, to the
                Indenture, dated as of February 17, 1994 (incorporated by
                reference to Exhibit 4.2 to the Report on Form 10-Q for the
                quarterly period ended March 31, 1999, filed by KAC, File
                No. 1-9447).

 4.10           Indenture, dated as of October 23, 1996, among KACC, as Issuer,
                Kaiser Alumina Australia Corporation, Alpart Jamaica Inc.,
                Kaiser Jamaica Corporation, Kaiser Finance Corporation, Kaiser
                Micromill Holdings, LLC, Kaiser Sierra Micromills, LLC, Kaiser
                Texas Micromill Holdings, LLC and Kaiser Texas Sierra
                Micromills, LLC, as Subsidiary Guarantors, and First Trust
                National Association, as Trustee, regarding KACC's 107/8% Series
                B Senior Notes Due 2006 (incorporated by reference to Exhibit
                4.2 to the Report on Form 10-Q for the quarterly period ended
                September 30, 1996, filed by KAC, File No. 1-9447).

 4.11           First Supplemental Indenture, dated as of July 15, 1997, to the
                Indenture, dated as of October 23, 1996 (incorporated by
                reference to Exhibit 4.3 to the Report on Form 10-Q for the
                quarterly period ended June 30, 1997, filed by KAC, File
                No. 1-9447).

 4.12           Second Supplemental Indenture, dated as of March 31, 1999, to
                the Indenture, dated as of October 23, 1996 (incorporated by
                reference to Exhibit 4.3 to the Report on Form 10-Q for the
                quarterly period ended March 31, 1999, filed by KAC, File
                No. 1-9447).

 4.13           Indenture, dated as of December 23, 1996, among KACC, as Issuer,
                Kaiser Alumina Australia Corporation, Alpart Jamaica Inc.,
                Kaiser Jamaica Corporation, Kaiser Finance Corporation, Kaiser
                Micromill Holdings, LLC, Kaiser Sierra Micromills, LLC, Kaiser
                Texas Micromill Holdings, LLC, and Kaiser Texas Sierra
                Micromills, LLC, as Subsidiary Guarantors, and First Trust
                National Association, as Trustee, regarding KACC's 10 7/8%
                Series D Senior Notes due 2006 (incorporated by reference to
                Exhibit 4.4 to the Registration Statement on Form S-4, dated
                January 2, 1997, filed by KACC, Registration No. 333-19143).

 4.14           First Supplemental Indenture, dated as of July 15, 1997, to the
                Indenture, dated as of December 23, 1996 (incorporated by
                reference to Exhibit 4.4 to the Report on Form 10-Q for the
                quarterly period ended June 30, 1997, filed by KAC, File
                No. 1-9447).

 4.15           Second Supplemental Indenture, dated as of March 31, 1999, to
                the Indenture, dated as of December 23, 1996 (incorporated by
                reference to Exhibit 4.4 to the Report on Form 10-Q for the
                quarterly period ended March 31, 1999, filed by KAC, File
                No. 1-9447).

 4.16           Credit Agreement, dated as of February 15, 1994, among KAC,
                KACC, the financial institutions a party thereto, and
                BankAmerica Business Credit, Inc., as Agent (incorporated by
                reference to Exhibit 4.4 to the Report on Form 10-K for the
                period ended December 31, 1993, filed by KAC, File No. 1-9447).

 4.17           First Amendment to Credit Agreement, dated as of July 21, 1994,
                amending the Credit Agreement, dated as of February 15, 1994,
                among KAC, KACC, the financial institutions party thereto, and
                BankAmerica Business Credit, Inc., as Agent (incorporated by
                reference to Exhibit 4.1 to the Report on Form 10-Q for the
                quarterly period ended June 30, 1994, filed by KAC, File No.
                1-9447).

 4.18           Second Amendment to Credit Agreement, dated as of March 10,
                1995, amending the Credit Agreement, dated as of February 15,
                1994, as amended, among KAC, KACC, the financial institutions
                party thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4.6 to the Report on Form
                10-K for the period ended December 31, 1994, filed by KAC,
                File No. 1-9447).

 4.19           Third Amendment to Credit Agreement, dated as of July 20, 1995,
                amending the Credit Agreement, dated as of February 15, 1994, as
                amended, among KAC, KACC, the financial institutions a party
                thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4.1 to the Report on Form
                10-Q for the quarterly period ended June 30, 1995, filed by KAC,
                File No. 1-9447).

 4.20           Fourth Amendment to Credit Agreement, dated as of October 17,
                1995, amending the Credit Agreement, dated as of February 15,
                1994, as amended, among KAC, KACC, the financial institutions a
                party thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4.1 to the Report on Form
                10-Q for the quarterly period ended September 30, 1995, filed by
                KAC, File No. 1-9447).

 4.21           Fifth Amendment to Credit Agreement, dated as of December 11,
                1995, amending the Credit Agreement, dated as of February 15,
                1994, as amended, among KAC, KACC, the financial institutions a
                party thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4.11 to the Report on Form
                10-K for the period ended December 31, 1995, filed by KAC, File
                No. 1-9447).

 4.22           Sixth Amendment to Credit Agreement, dated as of October 1,
                1996, amending the Credit Agreement, dated as of February 15,
                1994, as amended, among KAC, KACC, the financial institutions a
                party thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4.1 to the Report on Form
                10-Q for the quarterly period ended September 30, 1996, filed by
                KAC, File No. 1-9447).

 4.23           Seventh Amendment to Credit Agreement, dated as of December 17,
                1996, amending the Credit Agreement, dated as of February 15,
                1994, as amended, among KAC, KACC, the financial institutions a
                party thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4.18 to the Registration
                Statement on Form S-4, dated January 2, 1997, filed by KACC,
                Registration No. 333-19143).

 4.24           Eighth Amendment to Credit Agreement, dated as of February 24,
                1997, amending the Credit Agreement, dated as of February 15,
                1994, as amended, among KACC, KAC, the financial institutions a
                party thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4.16 to the Report on Form
                10-K for the period ended December 31, 1996, filed by KAC, File
                No. 1-9447).

 4.25           Ninth Amendment to Credit Agreement, dated as of April 21, 1997,
                amending the Credit Agreement, dated as of February 15, 1994, as
                amended, among KACC, KAC, the financial institutions a party
                thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4.5 to the Report on Form
                10-Q for the quarterly period ended June 30, 1997, filed by KAC,
                File No. 1-9447).

 4.26           Tenth Amendment to Credit Agreement, dated as of June 25, 1997,
                amending the Credit Agreement, dated as of February 15, 1994, as
                amended, among KACC, KAC, the financial institutions a party
                thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4.6 to the Report on Form
                10-Q for the quarterly period ended June 30, 1997, filed by KAC,
                File No. 1-9447).

 4.27           Eleventh Amendment to Credit Agreement, dated as of October 20,
                1997, amending the Credit Agreement, dated as of February 15,
                1994, as amended, among KACC, KAC, the financial institutions a
                party thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4.7 to the Report on Form
                10-Q for the quarterly period ended September 30, 1997, filed by
                KAC, File No. 1-9447).

 4.28           Twelfth Amendment to Credit Agreement, dated as of January 13,
                1998, amending the Credit Agreement, dated as of February 15,
                1994, as amended, among KACC, KAC, the financial institutions a
                party thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4.24 to the Report on Form
                10-K for the period ended December 31, 1997, filed by KAC, File
                No. 1-9447).

 4.29           Thirteenth Amendment to Credit Agreement, dated as of July 20,
                1998, amending the Credit Agreement, dated as of February 15,
                1994, as amended, among KACC, KAC, the financial institutions
                party thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4 to the Report on Form
                10-Q for the quarterly period ended June 30, 1998, filed by KAC,
                File No. 1-9447).

 4.30           Fourteenth Amendment to Credit Agreement, dated as of December
                11, 1998, amending the Credit Agreement, dated as of February
                15, 1994, as amended, among KACC, KAC, the financial
                institutions party thereto, and BankAmerica Business Credit,
                Inc., as Agent (incorporated by reference to Exhibit 4.26 to the
                Report on Form 10-K for the period ended December 31, 1998,
                filed by KAC, File No. 1-9447).

 4.31           Fifteenth Amendment to Credit Agreement, dated as of February
                23, 1999, amending the Credit Agreement, dated as of February
                15, 1994, as amended, among KACC, KAC, the financial
                institutions party thereto, and BankAmerica Business Credit,
                Inc., as Agent (incorporated by reference to Exhibit 4.27 to the
                Report on Form 10-K for the period ended December 31, 1998,
                filed by KAC, File No. 1-9447.)

 4.32           Sixteenth Amendment to Credit Agreement, dated as of March 26,
                1999, amending the Credit Agreement, dated as of February 15,
                1994, as amended, among KACC, KAC, the financial institutions
                party thereto, and BankAmerica Business Credit, Inc., as Agent
                (incorporated by reference to Exhibit 4.28 to the Report on Form
                10-K for the period ended December 31, 1998, filed by KAC, File
                No. 1-9447).

 4.33           Seventeenth Amendment to Credit Agreement, dated as of September
                24, 1999, amending the Credit Agreement, dated as of February
                15, 1994, as amended, among KACC, KAC, the financial
                institutions party thereto, and Bank of America, N.A. (successor
                to BankAmerica Business Credit, Inc.), as Agent (incorporated by
                reference to Exhibit 4.1 to the Report on Form 10-Q for the
                quarterly period ended September 30, 1999, filed by KAC, File
                No. 1-9447).

 4.34           Eighteenth Amendment to Credit Agreement, dated as of February
                11, 2000, amending the Credit Agreement, dated as of February
                15, 1994, as amended, among KACC, KAC, the financial
                institutions party thereto, and Bank of America, N.A. (successor
                to BankAmerica Business Credit, Inc.), as Agent (incorporated by
                reference to Exhibit 4.34 to the Report on Form 10-K for the
                period ended December 31, 1999, filed by KAC, File No. 1-9447).

*4.35           Nineteenth Amendment to Credit Agreement, dated as of December
                27, 2000, amending the Credit Agreement, dated as of February
                15, 1994, as amended, among KACC, KAC, the financial
                institutions party thereto, and Bank of America, N.A. (successor
                to BankAmerica Business Credit, Inc.), as Agent.

*4.36           Twentieth Amendment to Credit Agreement, dated as of January 26,
                2001, amending the Credit Agreement, dated as of February 15,
                1994, as amended, among KACC, KAC, the financial institutions
                party thereto, and Bank of America, N.A. (successor to
                BankAmerica Business Credit, Inc.), as Agent.

 4.37           Limited Waiver Regarding Repayment of CARIFA Bonds, dated
                February 17, 2000, among KAC, KACC, the financial institutions
                party thereto and Bank of America, N.A., as Agent (incorporated
                by reference to Exhibit 4.35 to the Report on Form 10-K for the
                period ended December 31, 1999, filed by KAC, File No. 1-9447).

 4.38           Agreement dated August 18, 2000, among KAC, KACC, the financial
                institutions party to the Credit Agreement dated as of February
                15, 1994, as amended, and Bank of America, N.A., as agent,
                regarding the Sale of the Center for Technology (incorporated by
                reference to Exhibit 4.1 to the Report on Form 10-Q for the
                period ended September 30, 2000, filed by KAC, File No. 1-9447).

 4.39           Intercompany Note between KAC and KACC (incorporated by
                reference to Exhibit 10.10 to the Report on Form 10-K for the
                period ended December 31, 1996, filed by MAXXAM Inc. ("MAXXAM"),
                File No. 1-3924).

 4.40           Confirmation of Amendment of Non-Negotiable Intercompany Note,
                dated as of October 6, 1993, between KAC and KACC (incorporated
                by reference to Exhibit 10.11 to the Report on Form 10-K for the
                period ended December 31, 1996, filed by MAXXAM, File No.
                1-3924).

*4.41           Amendment to Non-Negotiable Intercompany Note, dated as of
                December 11, 2000, between KAC and KACC.

 4.42           Senior Subordinated Intercompany Note between KAC and KACC dated
                February 15, 1994 (incorporated by reference to Exhibit 4.22 to
                the Report on Form 10-K for the  period ended December 31, 1993,
                filed by KAC, File No. 1-9447).

 4.43           Senior Subordinated Intercompany Note between KAC and KACC dated
                March 17, 1994 (incorporated by reference to Exhibit 4.23 to the
                Report on Form 10-K for the  period ended December 31, 1993,
                filed by KAC, File No. 1-9447).

                KAC has not filed certain long-term debt instruments not being
                registered with the Securities and Exchange Commission where the
                total amount of indebtedness authorized under any such
                instrument does not exceed 10% of the total assets of KAC and
                its subsidiaries on a consolidated basis. KAC agrees and
                undertakes to furnish a copy of any such instrument to the
                Securities and Exchange Commission upon its request.

 10.1           Form of indemnification agreement with officers and directors
                (incorporated by reference to Exhibit (10)(b) to the
                Registration Statement of KAC on Form S-4, File No. 33-12836).

 10.2           Tax Allocation Agreement, dated as of December 21, 1989, between
                MAXXAM and KACC (incorporated by reference to Exhibit 10.21 to
                Amendment No. 6 to the Registration Statement on Form S-1, dated
                December 14, 1989, filed by KACC, Registration No. 33-30645).

*10.3           Amendment of Tax Allocation Agreement, dated as of March 12,
                2001, between MAXXAM and KACC, amending the Tax Allocation
                Agreement dated as of December 21, 1989.

 10.4           Tax Allocation Agreement, dated as of February 26, 1991, between
                KAC and MAXXAM (incorporated by reference to Exhibit 10.23 to
                Amendment No. 2 to the Registration Statement on Form S-1, dated
                June 11, 1991, filed by KAC, Registration No. 33-37895).

 10.5           Tax Allocation Agreement, dated as of June 30, 1993, between
                KACC and KAC (incorporated by reference to Exhibit 10.3 to the
                Report on Form 10-Q for the quarterly period ended June 30,
                1993, filed by KACC, File No. 1-3605).

                  Executive Compensation Plans and Arrangements
                       [Exhibits 10.6 - 10.36, inclusive]

 10.6           Kaiser 1993 Omnibus Stock Incentive Plan (incorporated by
                reference to Exhibit 10.1 to the Report on Form 10-Q for the
                quarterly period ended June 30, 1993, filed by KACC, File
                No. 1-3605).

 10.7           Kaiser 1995 Employee Incentive Compensation Program
                (incorporated by reference to Exhibit 10.1 to the Report on Form
                10-Q for the quarterly period ended March 31, 1995, filed by
                KAC, File No. 1-9447).

 10.8           Kaiser 1995 Executive Incentive Compensation Program
                (incorporated by reference to Exhibit 99 to the Proxy Statement,
                dated April 26, 1995, filed by KAC, File No. 1-9447).

 10.9           Kaiser 1997 Omnibus Stock Incentive Plan (incorporated by
                reference to Appendix A to the Proxy Statement, dated April 29,
                1997, filed by KAC, File No. 1-9447).

 10.10          Director and Non-Executive Chairman Agreement, dated January 1,
                2000, among KAC, KACC and George T. Haymaker, Jr. (incorporated
                by reference to Exhibit 10.13 to the Report on Form 10-K for the
                period ended December 31, 1999, filed by KAC, File No. 1-9447).

 10.11          Time-Based Stock Option Grant pursuant to the Kaiser 1997
                Omnibus Stock Incentive Plan to George T. Haymaker, Jr.,
                effective January 1, 1998 (incorporated by reference to Exhibit
                10.18 to the Report on Form 10-K for the period ended December
                31, 1998, filed by KAC, File No. 1-9447).

*10.12          Agreement among George T. Haymaker, Jr., KAC and KACC amending
                Time-Based Stock Option Grant.

 10.13          Performance-Accelerated Stock Option Grant pursuant to the
                Kaiser 1997 Omnibus Stock Incentive Plan to George T. Haymaker,
                Jr., effective January 1, 1998 (incorporated by reference to
                Exhibit 10.19 to the Report on Form 10-K for the period ended
                December 31, 1998, filed by KAC, File No. 1-9447).

*10.14          Agreement among George T. Haymaker, Jr., KAC and KACC amending
                Performance-Accelerated Stock Option Grant.

 10.15          Letter Agreement, dated January 1995, between KAC and Charles E.
                Hurwitz, granting Mr. Hurwitz stock options under the Kaiser
                1993 Omnibus Stock Incentive Plan (incorporated by reference to
                Exhibit 10.17 to the Report on Form 10-K for the period ended
                December 31, 1994, filed by KAC, File No. 1-9447).

 10.16          Employment Agreement, dated as of June 1, 1999, between KACC and
                Raymond J. Milchovich (incorporated by reference to Exhibit 10.1
                to the Report on Form 10-Q for the quarterly period ended June
                30, 1999, filed by KAC, File No. 1-9447).

 10.17          Time-Based Stock Option Grant pursuant to the Kaiser 1997
                Omnibus Stock Incentive Plan to Raymond J. Milchovich, effective
                July 2, 1998 (incorporated by reference to Exhibit 10.4 to the
                Report on Form 10-Q for the quarterly period ended September 30,
                1998, filed by KAC, File No. 1-9447).

*10.18          Agreement among Raymond J. Milchovich, KAC and KACC amending
                1998 Time-Based Stock Option Grant.

 10.19          Time-Based Stock Option Grant pursuant to the Kaiser 1997
                Omnibus Stock Incentive Plan to Raymond J. Milchovich
                (incorporated by reference to Exhibit 10.4 to the Report on Form
                10-Q for the period ended September 30, 2000, filed by KAC,
                File No. 1-9447).

*10.20          Agreement among Raymond J. Milchovich, KAC and KACC amending
                1999 Time-Based Stock Option Grant.

 10.21          Restricted Stock Agreement between Raymond J. Milchovich, KAC
                and KACC pursuant to the Kaiser 1997 Omnibus Stock Incentive
                Plan (incorporated by reference to Exhibit 10.2 to the Report on
                Form 10-Q for the period ended September 30, 2000, filed by KAC,
                File No. 1-9447).

 10.22          Employment Agreement between KACC and John T. La Duc made
                effective for the period from January 1, 1998, to December 31,
                2002 (incorporated by reference to Exhibit 10.5 to the Report on
                Form 10-Q for the quarterly period ended September 30, 1998,
                filed by KAC, File No. 1-9447).

 10.23          Time-Based Stock Option Grant pursuant to the Kaiser 1997
                Omnibus Stock Incentive Plan to John T. La Duc, effective July
                10, 1998 (incorporated by reference to Exhibit 10.6 to the
                Report on Form 10-Q for the quarterly period ended September 30,
                1998, filed by KAC, File No. 1-9447).

 10.24          Time-Based Stock Option Grant pursuant to the Kaiser 1997
                Omnibus Stock Incentive Plan to Joseph A. Bonn, effective
                September 9, 1999 (incorporated by reference to Exhibit 10.1 to
                the Report on Form 10-Q for the period ended June 30, 2000,
                filed by KAC, File No. 1-9447).

 10.25          Executive Employment Agreement, effective December 1, 1999,
                between MAXXAM and J. Kent Friedman (incorporated by reference
                to Exhibit 10.52 to the Report on Form 10-K for the period ended
                December 31, 1999, filed by MAXXAM, File No. 1-3924).

 10.26          Time-Based Stock Option Grant pursuant to the Kaiser 1997
                Omnibus Stock Incentive Plan to J. Kent Friedman, effective
                December 1, 1999 (incorporated by reference to Exhibit 10.2 to
                the Report on Form 10-Q for the period ended June 30, 2000,
                filed by KAC, File No. 1-9447).

 10.27          Employment Agreement made and entered into as of September 1,
                1996, by and between KACC and Jack A. Hockema (incorporated by
                reference to Exhibit 10 to the Report on Form 10-Q for the
                quarterly period ended September 30, 1996, filed by KAC, File
                No. 1-9447).

 10.28          Letter Agreement, dated April 15, 1999, amending the Employment
                Agreement made and entered into as of September 1, 1996, by and
                between KACC and Jack A. Hockema (incorporated by reference to
                Exhibit 10.26 to the Report on Form 10-K for the period ended
                December 31, 1999, filed by KAC, File No. 1-9447).

 10.29          Description of compensation arrangements among KACC, KAC, and
                Jack A. Hockema (incorporated by reference to Exhibit 10.27 to
                the Report on Form 10-K for the period ended December 31, 1999,
                filed by KAC, File No. 1-9447).

 10.30          Stock Option Grant pursuant to the Kaiser 1997 Omnibus Stock
                Incentive Plan to Jack A. Hockema (incorporated by reference to
                Exhibit 10.1 to the Report on Form 10-Q for the period ended
                September 30, 2000, filed by KAC, File No. 1-9447).

 10.31          Letter Agreement, dated July 27, 1998, between KACC and John H.
                Walker (incorporated by reference to Exhibit 10.20 to the Report
                on Form 10-K for the period ended December 31, 1998, filed by
                KAC, File No. 1-9447).

 10.32          Description of Kaiser Severance Protection and Change of Control
                Benefits Program (incorporated by reference to Exhibit 10.21 to
                the Report on Form 10-K for the period ended December 31, 1998,
                filed by KAC, File No. 1-9447).

 10.33          Form of letter agreement with persons granted stock options
                under the Kaiser 1993 Omnibus Stock Incentive Plan to acquire
                shares of KAC Common Stock (incorporated by reference to Exhibit
                10.18 to the Report on Form 10-K for the period ended December
                31, 1994, filed by KAC, File No. 1-9447).

 10.34          Form of Enhanced Severance Agreement between KACC and key
                executive personnel (incorporated by reference to Exhibit 10.3
                to the Report on Form 10-Q for the period ended September 30,
                2000, filed by KAC, File No. 1-9447).

 10.35          Form of Non-Employee Director Stock Option Agreement pursuant to
                the Kaiser 1997 Omnibus Stock Incentive Plan (incorporated by
                reference to Exhibit 10.3 to the Report on Form 10-Q for the
                period ended June 30, 2000, filed by KAC, File No. 1-9447).

 10.36          Form of Deferred Fee Agreement between KAC, KACC, and directors
                of KAC and KACC (incorporated by reference to Exhibit 10 to the
                Report on Form 10-Q for the quarterly period ended March 31,
                1998, filed by KAC, File No. 1-9447).

*21             Significant Subsidiaries of KAC.

*23.1           Consent of Independent Public Accountants.

*23.2           Consent of Wharton Levin Ehrmantraut Klein & Nash, P.A.

*23.3           Consent of Heller Ehrman White & McAuliffe LLP.



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

EX-4.35

                                                     E X E C U T I O N   C O P Y

           NINETEENTH AMENDMENT TO CREDIT AGREEMENT AND LIMITED WAIVER

                  THIS NINETEENTH AMENDMENT TO CREDIT AGREEMENT AND
LIMITED WAIVER (this "Amendment"), dated as of December 27, 2000, is by and
between KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware corporation (the
"Company"), KAISER ALUMINUM CORPORATION, a Delaware corporation (the "Parent
Guarantor"), the various financial institutions that are or may from time to
time become parties to the Credit Agreement referred to below (collectively, the
"Lenders" and, individually, a "Lender"), and Bank of America, N.A. (successor
to BankAmerica Business Credit, Inc., a Delaware corporation), as agent (in such
capacity, together with its successors and assigns in such capacity, the
"Agent") for the Lenders. Capitalized terms used, but not defined, herein shall
have the meanings given to such terms in the Credit Agreement, as amended
hereby.

                              W I T N E S S E T H:

                  WHEREAS, the Company, the Parent Guarantor, the Lenders and
the Agent are parties to the Credit Agreement, dated as of February 15, 1994, as
amended by the First Amendment to Credit Agreement, dated as of July 21, 1994,
the Second Amendment to Credit Agreement, dated as of March 10, 1995, the Third
Amendment to Credit Agreement and Acknowledgement, dated as of July 20, 1995,
the Fourth Amendment to Credit Agreement, dated as of October 17, 1995, the
Fifth Amendment to Credit Agreement, dated as of December 11, 1995, the Sixth
Amendment to Credit Agreement, dated as of October 1, 1996, the Seventh
Amendment to Credit Agreement, dated as of December 17, 1996, the Eighth
Amendment to Credit Agreement, dated as of February 24, 1997, the Ninth
Amendment to Credit Agreement and Acknowledgment, dated as of April 21, 1997,
the Tenth Amendment to Credit Agreement and Assignment, dated as of June 25,
1997, the Eleventh Amendment to Credit Agreement and Limited Waivers, dated as
of October 20, 1997, the Twelfth Amendment to Credit Agreement, dated as of
January 13, 1998, the Thirteenth Amendment to Credit Agreement, dated as of July
20, 1998, the Fourteenth Amendment to Credit Agreement, dated as of December 11,
1998, the Fifteenth Amendment to Credit Agreement, dated as of February 23,
1999, the Sixteenth Amendment to Credit Agreement, dated as of March 26, 1999,
the Seventeenth Amendment to Credit Agreement, dated as of September 24, 1999,
and the Eighteenth Amendment to Credit Agreement, dated as of February 11, 2000
(the "Credit Agreement"); and

                  WHEREAS, the parties hereto have agreed to amend the Credit
Agreement as herein provided;

                  NOW, THEREFORE, the parties hereto agree as follows:

Section 1.    Amendments to Credit Agreement.

1.1  Amendments to Article I:  Definitions and Accounting Terms.

         A. Section 1.1 of the Credit Agreement is hereby amended by amending
the definitions of "Collateral Documents," "Currency Hedge Providers,"
"Intercreditor Agreement," "Minimum Net Worth," "Obligations," and "Secured
Lenders" contained therein to read in their entirety as follows:

                           '"Collateral Documents' means, collectively, the
                  Parent Collateral Documents, the Company Collateral Documents,
                  the Subsidiary Collateral Documents, the Collection Bank
                  Agreements, the Concentration Bank Agreement, and each other
                  Instrument or document pursuant to which a Lien is granted to
                  the Agent (or perfected in favor of the Agent) (or to or in
                  favor of any agent, trustee, or other Person acting on the
                  Agent's behalf) as security for any of the Obligations, as any
                  of the foregoing may be amended, supplemented, restated, or
                  otherwise modified from time to time in accordance with the
                  provisions hereof or thereof. Anything in this Agreement or in
                  any other Loan Document to the contrary notwithstanding, the
                  Obligations secured under each Collateral Document shall be
                  deemed to include all Currency Hedge Obligations and Cash
                  Management Obligations now existing or hereafter arising;
                  provided, however, that anything in this Agreement or in any
                  other Loan Document to the contrary notwithstanding, (a) with
                  respect to any Cash Management Obligations constituting
                  Indebtedness (as defined in the Senior Indenture, the New
                  Senior Indenture or the Additional New Senior Indentures), the
                  Collateral shall not include any U.S. Fixed Assets (as defined
                  in the Senior Indenture, the New Senior Indenture or the
                  Additional New Senior Indentures) and (b) no Proceeds of any
                  U.S. Fixed Assets, or of the disposition by the Agent of any
                  U.S. Fixed Assets, shall be applied toward the satisfaction of
                  any Cash Management Obligations constituting Indebtedness (as
                  defined in the Senior Indenture, the New Senior Indenture or
                  the Additional New Senior Indentures)."

                           '"Currency Hedge Providers' means all Lenders party
                  to a Currency Hedge Agreement and, in their capacity as a
                  Currency Hedge Provider, party to the Intercreditor
                  Agreement."

                           "'Intercreditor Agreement' means the intercreditor
                  agreement executed and delivered by the Agent, each Lender,
                  each Lender party to a Currency Hedge Agreement and each
                  Lender providing Cash Management Services, in substantially
                  the form of Exhibit U attached hereto, as amended,
                  supplemented, restated or otherwise modified from time to time
                  in accordance with the provisions thereof."

                           "'Minimum Net Worth' means (a) for each Fiscal
                  Quarter of the Company ending on or prior to December 31, 1998
                  (commencing with the Fiscal Quarter ending September 30,
                  1996), $500,000,000 plus 50% of Net Income (but not loss) for
                  each such Fiscal Quarter, (b) for the Fiscal Quarters of the
                  Company ending on March 31, 1999 and June 30, 1999,
                  $600,000,000 plus 50% of Net Income (but not loss) for each
                  such Fiscal Quarter, (c) for the Fiscal Quarters of the
                  Company ending on September 30, 1999, December 31, 1999,
                  March 31, 2000, June 30, 2000 and September 30, 2000,
                  $550,000,000 plus 50% of Net Income (but not loss) for each
                  such Fiscal Quarter, and (d) for each Fiscal Quarter of the
                  Company ending thereafter, $515,000,000 plus 50% of Net Income
                  (but not loss) for each such Fiscal Quarter; provided that the
                  calculation of Minimum Net Worth shall exclude (i) the effect
                  of any non-cash charges, up to an aggregate amount of
                  $70,000,000, in respect of the Micromill project, including
                  (without limitation) any write-down of Micromill project
                  assets located at the Center for Technology in Pleasanton,
                  California, and at the Micromill facility near Reno, Nevada,
                  (ii) the net cumulative effect of any mark-to-market gains or
                  losses incurred after December 31, 1998, up to an aggregate
                  net amount of $50,000,000 of losses, on aluminum hedging
                  agreements of the Company and its Subsidiaries that do not
                  qualify for hedging treatment under GAAP, (iii) the effect of
                  any non-cash charges, up to an aggregate amount of
                  $30,000,000, in respect of the settlement of the Company's
                  labor dispute with the United Steelworkers of America, and
                  (iv) the net cumulative effect of any gains or losses, up to
                  an aggregate net amount of $50,000,000 of losses, in respect
                  of adjustments to the net cost basis of the assets of the
                  Gramercy, Louisiana facility as a result of the explosion at
                  such facility, all of the above adjustments to be reflected on
                  the relevant Compliance Certificate."

                           "'Obligations' means (a) all obligations (monetary or
                  otherwise) of the Company and each other Obligor arising under
                  or in connection with this Agreement, the Letters of Credit,
                  and each other Loan Document, (b) all Currency Hedge
                  Obligations, and (c) all Cash Management Obligations."

                           "'Secured Lenders' means the Agent, each Lender, each
                  Issuer Bank, each Currency Hedge Provider and each Cash
                  Management Provider, together with any successors and assigns
                  thereto."

         B.   Section 1.1 of the Credit Agreement is hereby further amended by
adding the following definitions in appropriate alphabetical order:

                           "'Cash Management Obligations' means, with respect to
                  the Company, all liabilities and obligations (monetary or
                  otherwise) of the Company arising in connection with Cash
                  Management Services."

                           "'Cash Management Providers'  means all Lenders
                  providing Cash Management Services and, in their capacity as a
                  Cash Management Provider, party to the Intercreditor Agreement."

                            "'Cash Management Services' means any one or more of
                  the following types of services or facilities extended to the
                  Company by a Cash Management Provider: (a) credit cards; and
                  (b) any cash management or related services including
                  automatic clearing house transfer of funds by a Cash Management
                  Provider for the account of the Company pursuant to
                  agreement or overdrafts."

         C.       Section 1.1 of the Credit Agreement is hereby further amended
by adding the following to the end of the definition of "Interest Coverage
Ratio" contained therein:

                  "; provided that the calculation of EBITDA for purposes of the
                  calculation of the Interest Coverage Ratio shall exclude the
                  effect of any non-cash charges, up to an aggregate amount of
                  $40,000,000, in respect of the write-down of the carrying
                  value of the Tacoma and Mead facilities."

1.2  Amendment to Article II:  Commitments and Borrowing Procedures

                  Section 2.1.1(b) of the Credit Agreement is hereby amended by
deleting the reference to "$325,000,000" contained therein and substituting a
reference to "$300,000,000" therefor.

1.3  Amendments to Article IX:  Covenants

         A.   Section 9.2.2(b)(x) of the Credit Agreement is hereby amended to
read in its entirety as follows:

                           "(x) Indebtedness of the Company in respect of (1)
                  unsecured Hedging Obligations; (2) secured Hedging
                  Obligations; (3) Currency Hedge Agreements, provided the
                  remaining Dollar amount (or the Dollar Equivalent thereof) of
                  all currency payments the Company is obligated to make under
                  all such Currency Hedge Agreements (including any payments
                  that would be payable by the Company following the exercise of
                  any foreign exchange option sold by the Company but excluding,
                  during the period prior to the date of exercise, any payments
                  that would be payable by the Company following the exercise of
                  any foreign exchange option purchased by the Company) does not
                  exceed $500,000,000, in the aggregate, at any time; and (4)
                  Cash Management Obligations;"

         B.   Section 9.2.3(n) and Section 9.2.3(w) of the Credit Agreement are
hereby amended to read in their entirety as follows:

                           "(n) Liens on the Company's or any of its
                  Subsidiary's rights under agreements with respect to spot,
                  forward, future and option transactions, entered into in the
                  ordinary course of business, involving (or, in the case of
                  futures and options, for or relating to) the purchase and sale
                  of aluminum, alumina, bauxite, energy or other commodities
                  used in the production process or on the transaction accounts
                  in which such transactions are effected securing the Company's
                  or such Subsidiary's obligations under such agreements;

                           "(w) Liens (i) securing the obligations of the
                  Company under Currency Hedge Agreements, provided (1) the
                  remaining Dollar amount (or the Dollar Equivalent thereof) of
                  all currency payments the Company is obligated to make under
                  all such Currency Hedge Agreements (including any payments
                  that would be payable by the Company following the exercise of
                  any foreign exchange option sold by the Company but excluding,
                  during the period prior to the date of exercise, any payments
                  that would be payable by the Company following the exercise of
                  any foreign exchange option purchased by the Company) does not
                  exceed $500,000,000, in the aggregate, at any time, and (2)
                  all Property which is subject to any such Lien constitutes
                  Collateral; (ii) securing Cash Management Obligations,
                  provided all Property which is subject to any such Lien
                  constitutes Collateral; or (iii) securing Hedging
                  Obligations;"

         C.   Section 9.2.4(b) of the Credit Agreement is hereby amended by
amending the table contained therein to read in its entirety as follows:

         "Date                                                  Ratio
          ----                                                  ------------
         First Fiscal Quarter of 1998                           0.80 to 1.00
         Second Fiscal Quarter of 1998                          1.20 to 1.00
         Third Fiscal Quarter of 1998                           1.60 to 1.00
         Fourth Fiscal Quarter of 1998                          1.10 to 1.00
         First Fiscal Quarter of 1999                           No Test
         Second Fiscal Quarter of 1999                          No Test
         Third Fiscal Quarter of 1999                           No Test
         Fourth Fiscal Quarter of 1999                          No Test
         First Fiscal Quarter of 2000                           0.50 to 1.00
         Second Fiscal Quarter of 2000                          1.00 to 1.00
         Third Fiscal Quarter of 2000                           1.25 to 1.00
         Fourth Fiscal Quarter of 2000                          1.00 to 1.00
         First Fiscal Quarter of 2001                           1.00 to 1.00
         Second Fiscal Quarter of 2001 and Thereafter           1.00 to 1.00"

         D.      Section 9.2.5(k) of the Credit Agreement is hereby amended to
read in its entirety as follows:

                           "(k) Investments in the form of advance payments in
                  connection with (i) Hedging Obligations, (ii) Currency Hedge
                  Agreements, and (iii) spot, forward, future and option
                  transactions, entered into in the ordinary course of business,
                  involving (or, in the case of futures and options, for or
                  relating to) the purchase and sale of aluminum, alumina,
                  bauxite, energy or other commodities used in the production
                  process;"

          E.      Section 9.2.7 of the Credit Agreement is hereby amended by
amending the table contained therein to read in its entirety as follows:

"Fiscal Year                                        Base Amount
 -----------                                        -----------
     1994                                          $  60,000,000
     1995                                          $  80,000,000
     1996                                           $175,000,000
     1997                                           $175,000,000
     1998                                           $140,000,000
     1999                                           $140,000,000
     2000                                           $185,000,000
     Thereafter                                     $140,000,000 "

         F.   Section 9.2.11(j) of the Credit Agreement is hereby amended by
deleting the reference to "$25,000,000" contained therein and substituting a
reference to "$35,000,000" therefor.

         G. Section 9.2.14 of the Credit Agreement is hereby amended by deleting
the two references to "$1,500,000" contained in clause (d) of the second
paragraph thereof and substituting a reference to "$2,250,000" therefor.

1.4  Amendment to Exhibits.

                  Exhibit U to the Credit Agreement is hereby deleted and
Exhibit I hereto substituted therefor.

1.5  Amendment to Signature Pages.

                  The Percentages set forth opposite the Lenders' names on the
signature pages of the Credit Agreement are hereby amended to read as follows:

                  "Bank of America, N.A.                               36.307%
                  Congress Financial Corporation (Western)             27.768%
                  La Salle Bank National Association                    5.666%
                  The CIT Group/Business Credit, Inc.                   7.333%
                  Transamerica Business Credit Corporation              7.362%
                  Heller Financial, Inc.                               10.333%
                  ABN AMRO Bank N.V.                                    5.231%  "

1.6  Amendments to Collateral Documents.

                  The parties agree that, as of the Nineteenth Amendment
Effective Date (as defined below), the Parent Security Agreement, the Company
Pledge Agreement, the Company Security Agreement, the Subsidiary Guaranty, the
Subsidiary Security Agreement, the Company Deeds of Trust, the Company Mortgages
and the Intercompany Note Pledge Agreement shall be amended or supplemented as
set forth in Exhibits II, III, IV, V, VI, VII, VIII and IX hereto, respectively.

Section 2.    Limited Waiver.

                  The undersigned Lenders, constituting Required Lenders under
the Credit Agreement, hereby waive compliance with the provisions of Section
9.2.6(b)(ii) of the Credit Agreement to the extent, and only to the extent,
necessary to permit Alumina Partners of Jamaica, a Subsidiary of the Company, to
purchase and cancel a portion of its Caribbean Basin Projects Financing
Authority Bonds in the aggregate principal amount of $34,000,000 (only
$22,100,000 of such amount to be paid by the Company) and to pay accrued
interest thereon.

                  Without limiting the generality of the provisions of Section
12.1 of the Credit Agreement, the waiver set forth in this Section 2 shall be
limited precisely as written and relates solely to the noncompliance by Company
with the provisions of Section 9.2.6(b)(ii) of the Credit Agreement in the
manner and to the extent described above, and nothing in this Section 2 shall be
deemed to (a) constitute a waiver of compliance by Company (i) with respect to
Section 9.2.6(b)(ii) of the Credit Agreement in any other instance or (ii) any
other term, provision or condition of the Credit Agreement or any other
instrument or agreement referred to therein or (b) prejudice any right or remedy
that Agent or any Lender may now have or may have in the future under or in
connection with the Credit Agreement or any other instrument or agreement
referred to therein.

Section 3.    Conditions to Effectiveness.

                  This Amendment shall become effective as of the date hereof
only when the following conditions shall have been satisfied and notice thereof
shall have been given by the Agent to the Parent Guarantor, the Company and each
Lender (the date of satisfaction of such conditions and the giving of such
notice being referred to herein as the "Nineteenth Amendment Effective Date"):

         A. The Agent shall have received for each Lender counterparts hereof
duly executed on behalf of the Parent Guarantor, the Company, the Agent and the
Required Lenders (or notice of the approval of this Amendment by the Required
Lenders satisfactory to the Agent shall have been received by the Agent).

         B.   The Agent shall have received:

                  (1) Resolutions of the Board of Directors or of the Executive
         Committee of the Board of Directors of the Company, the Parent
         Guarantor and the applicable Subsidiaries of the Company approving and
         authorizing the execution, delivery and performance of this Amendment
         and the amendments to the Collateral Documents described in Section 1.6
         hereof, certified by their respective corporate secretaries or
         assistant secretaries as being in full force and effect without
         modification or amendment as of the date of execution hereof by the
         Company, the Parent Guarantor or such Subsidiary, as the case may be;

                  (2) A signature and incumbency certificate of the officers of
         the Company, the Parent Guarantor and the applicable Subsidiaries of
         the Company executing this Amendment and the amendments to the
         Collateral Documents described in Section 1.6 hereof;

                  (3) For each Lender, an opinion, addressed to the Agent and
         each Lender, from Kramer Levin Naftalis & Frankel LLP, in form and
         substance satisfactory to the Agent;

                  (4) Such other information, approvals, opinions, documents or
         instruments as the Agent may reasonably request; and

                  (5) For the pro rata benefit of the Lenders, calculated in
         accordance with the Percentages set forth in Section 1.5 hereof, a fee
         in the amount of $450,000.

Section 4.    Conditions Subsequent.

                  On or prior to January 31, 2001, (a) the Agent shall have
received duly executed amendments to the UCC-1 Financing Statements originally
filed under the Credit Agreement naming the Cash Management Providers as
additional secured parties and (b) the amendments to the Company Deeds of Trust
and the Company Mortgages described in Section 1.6 hereof shall have been duly
recorded.

Section 5.    Company's Representations and Warranties.

                  In order to induce the Lenders and the Agent to enter into
this Amendment and to amend the Credit Agreement in the manner provided herein,
the Parent Guarantor and the Company represent and warrant to each Lender and
the Agent that, as of the Nineteenth Amendment Effective Date, after giving
effect to the effectiveness of this Amendment, the following statements are true
and correct in all material respects:

         A. Authorization of Agreements. The execution and delivery of this
Amendment by the Company and the Parent Guarantor and the performance of the
Credit Agreement as amended by this Amendment (the "Amended Agreement") by the
Company and the Parent Guarantor are within such Obligor's corporate powers and
have been duly authorized by all necessary corporate action on the part of the
Company and the Parent Guarantor, as the case may be.

         B. No Conflict.  The execution and delivery by the Company and the
Parent Guarantor of this Amendment and the performance by the Company and the
Parent Guarantor of the Amended Agreement do not:

                  (1) contravene such Obligor's Organic Documents;

                  (2) contravene the Senior Indenture, the New Senior Indenture,
         the Additional New Senior Indentures, or the Subordinated Indenture or
         contravene any other contractual restriction where such a contravention
         has a reasonable possibility of having a Materially Adverse Effect or
         contravene any law or governmental regulation or court decree or order
         binding on or affecting such Obligor or any of its Subsidiaries; or

                  (3) result in, or require the creation or imposition of, any
         Lien on any of such Obligor's properties or any of the properties of
         any Subsidiary of such Obligor, other than pursuant to the Loan
         Documents.

         C. Binding Obligation. This Amendment has been duly executed and
delivered by the Company and the Parent Guarantor and this Amendment and the
Amended Agreement constitute the legal, valid and binding obligations of the
Company and the Parent Guarantor, enforceable against the Company and the Parent
Guarantor in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally and by general principles of equity.

         D.   Governmental Approval, Regulation, etc.  No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or any other Person is required for the due
execution, delivery or performance of this Amendment by the Company or the
Parent Guarantor.

         E.   Incorporation of Representations and Warranties from Credit
Agreement.  Each of the statements set forth in Section 7.2.1 of the Credit
Agreement is true and correct.

Section 6.    Acknowledgement and Consent.

                  The Company is a party to the Company Collateral Documents, in
each case as amended through the date hereof, pursuant to which the Company has
created Liens in favor of the Agent on certain Collateral to secure the
Obligations. The Parent Guarantor is a party to the Parent Collateral Documents,
in each case as amended through the date hereof, pursuant to which the Parent
Guarantor has created Liens in favor of the Agent on certain Collateral and
pledged certain Collateral to the Agent to secure the Obligations of the Parent
Guarantor. Certain Subsidiaries of the Company are parties to the Subsidiary
Guaranty and/or one or more of the Subsidiary Collateral Documents, in each case
as amended through the date hereof, pursuant to which such Subsidiaries have (i)
guarantied the Obligations and/or (ii) created Liens in favor of the Agent on
certain Collateral. The Company, the Parent Guarantor and such Subsidiaries are
collectively referred to herein as the "Credit Support Parties", and the
Company Collateral Documents, the Parent Collateral Documents, the Subsidiary
Guaranty and the Subsidiary Collateral Documents are collectively referred to
herein as the "Credit Support Documents".

                  Each Credit Support Party hereby acknowledges that it has
reviewed the terms and provisions of the Credit Agreement as amended by this
Amendment and consents to the amendment of the Credit Agreement effected as of
the date hereof pursuant to this Amendment.

                  Each Credit Support Party acknowledges and agrees that any of
the Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect. Each Credit Support Party hereby confirms
that each Credit Support Document to which it is a party or otherwise bound and
all Collateral encumbered thereby will continue to guaranty or secure, as the
case may be, the payment and performance of all obligations guaranteed or
secured thereby, as the case may be.

                  Each Credit Support Party (other than the Company and the
Parent Guarantor) acknowledges and agrees that (i) notwithstanding the
conditions to effectiveness set forth in this Amendment, such Credit Support
Party is not required by the terms of the Credit Agreement or any other Loan
Document to consent to the amendments to the Credit Agreement effected pursuant
to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or
any other Loan Document shall be deemed to require the consent of such Credit
Support Party to any future amendments to the Credit Agreement.

Section 7.    Miscellaneous.

         A.   Reference to and Effect on the Credit Agreement and the Other Loan Documents.

                  (1) On and after the Nineteenth Amendment Effective Date, each
         reference in the Credit Agreement to "this Agreement", "hereunder,"
         "hereof," "herein" or words of like import referring to the Credit
         Agreement, and each reference in the other Loan Documents to the
         "Credit Agreement," "thereunder," "thereof" or words of like import
         referring to the Credit Agreement shall mean and be a reference to the
         Amended Agreement.

                  (2) Except as specifically amended by this Amendment and the
         amendments to the Collateral Documents described in Section 1.6 hereof,
         the Credit Agreement and the other Loan Documents shall remain in full
         force and effect and are hereby ratified and confirmed.

         B.   Applicable Law.  THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO SUCH LAWS RELATING TO
CONFLICTS OF LAWS.

         C.   Headings.  The various headings of this Amendment are inserted
for convenience only and shall not affect the meaning or interpretation of this
Amendment or any provision hereof.

         D.   Counterparts.  This Amendment may be executed by the parties
hereto in several counterparts and by the different parties on separate
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.

         E.   Severability.  Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Amendment
or affecting the validity or enforceability of such provisions in any other
jurisdiction.

                  IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered as of the day and year first above written.

KAISER ALUMINUM CORPORATION                          KAISER ALUMINUM & CHEMICAL
                                                     CORPORATION

By:   /S/ DAVID A. CHEADLE                           By:     /S/ DAVID A. CHEADLE
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

BANK OF AMERICA, N.A. (successor to                  BANK OF AMERICA, N.A. (successor to
BankAmerica Business Credit, Inc.), as Agent         BankAmerica Business Credit, Inc.)

By:  /S/ MICHAEL J. JASAITIS                         By:    /S/ MICHAEL J. JASAITIS
Name: Michael J. Jasaitis                            Name: Michael J. Jasaitis
Its: Vice President                                  Its: Vice President

THE CIT GROUP/BUSINESS                               HELLER FINANCIAL, INC.
CREDIT, INC.

By:  /S/ GRANT WEISS                                 By:  /S/ RICHARD HOLSTON
Name Printed: Grant Weiss                            Name Printed:  Richard Holston
Its:  Assistant Vice President                       Its:  Assistant Vice President

CONGRESS FINANCIAL CORPORATION                       TRANSAMERICA BUSINESS CREDIT
(WESTERN)                                            CORPORATION

By:   /S/ GARY D. CASSIANNI                          By:  /S/ ARI D. KAPLAN
Name Printed:  Gary D. Cassianni                     Name Printed:  Ari D. Kaplan
Its:  Vice President                                 Its:  Vice President

LA SALLE BANK NATIONAL                               ABN AMRO BANK N.V.
ASSOCIATION (formerly known as
La Salle National Bank)                              By:  /S/ L. DAVID WRIGHT
                                                     Name Printed:  L. David Wright
                                                     Its:  Group Vice President
By:   /S/ DOUGLAS C. COLLETTI
Name Printed: Douglas C. Colletti                    By:  /S/ KEVIN S. MCFADDEN
Its: 1st VP                                          Name Printed:  Kevin S. McFadden
                                                     Its:  Group Vice President

ACKNOWLEDGED AND AGREED TO:

AKRON HOLDING CORPORATION                            KAISER ALUMINUM & CHEMICAL
                                                     INVESTMENT, INC.
By: /S/ DAVID A. CHEADLE                             By:  /S/ DAVID A. CHEADLE
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER ALUMINUM PROPERTIES,                          KAISER ALUMINUM TECHNICAL
INC.                                                 SERVICES, INC.

By:  /S/ DAVID A. CHEADLE                            By:  /S/ DAVID A. CHEADLE
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

OXNARD FORGE DIE COMPANY, INC.                       KAISER ALUMINIUM
                                                     INTERNATIONAL, INC.

By:  /S/ DAVID A. CHEADLE                            By:  /S/ DAVID A. CHEADLE
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER ALUMINA AUSTRALIA                             KAISER FINANCE CORPORATION
CORPORATION
By:  /S/ DAVID A. CHEADLE                            By:  /S/ DAVID A. CHEADLE
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

ALPART JAMAICA INC.                                  KAISER JAMAICA CORPORATION

By:  /S/ DAVID A. CHEADLE                            By:  /S/ DAVID A. CHEADLE
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER BAUXITE COMPANY                               KAISER EXPORT COMPANY

By:  /S/ DAVID A. CHEADLE                            By:  /S/ DAVID A. CHEADLE
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER MICROMILL HOLDINGS, LLC                       KAISER SIERRA MICROMILLS, LLC

By:  /S/ DAVID A. CHEADLE                            By:  /S/ DAVID A. CHEADLE
Name Printed:  David A. Cheadle                      Name Printed: David A. Cheadle
Its:  Assistant Treasurer                            Its: Assistant Treasurer

KAISER TEXAS SIERRA MICROMILLS,                      KAISER TEXAS MICROMILL
LLC                                                  HOLDINGS, LLC

By:  /S/ DAVID A. CHEADLE                            By:  /S/ DAVID A. CHEADLE
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER BELLWOOD CORPORATION                          KAISER TRANSACTION CORP.

By:  /S/ DAVID A. CHEADLE                            By:  /S/ DAVID A. CHEADLE
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer


                                    EXHIBIT I

                                    EXHIBIT U
                             INTERCREDITOR AGREEMENT

                  This INTERCREDITOR AGREEMENT, dated as of December 27, 2000
(as amended, supplemented, amended and restated or otherwise modified from time
to time, this "Agreement"), is by and among (i) BANK OF AMERICA, N.A. (successor
to BankAmerica Business Credit, Inc., a Delaware corporation), as collateral
agent (in such capacity, together with its successors and assigns in such
capacity, the "Collateral Agent") for (a) the financial institutions (the
"Lenders") that are or may from time to time become parties to the Credit
Agreement, dated as of February 15, 1994 (as amended, supplemented, amended and
restated or otherwise modified from time to time, the "Credit Agreement") by and
among Kaiser Aluminum & Chemical Corporation, a Delaware corporation (the
"Company"), Kaiser Aluminum Corporation, a Delaware corporation (the "Parent
Guarantor"), Bank of America, N.A., as Agent for the Lenders, and the Lenders,
(b) the Lenders that may from time to time enter into a Currency Hedge Agreement
(as defined in the Credit Agreement) with the Company and become a party hereto
(the "Currency Hedge Providers"), and (c) the Lenders that may from time to time
provide Cash Management Services (as defined in the Credit Agreement) to the
Company and become a party hereto (the "Cash Management Providers"); (ii) the
LENDERS; (iii) the CURRENCY HEDGE PROVIDERS; and (iv) the CASH MANAGEMENT
PROVIDERS.

                                R E C I T A L S:

                  A. Capitalized terms used in this Agreement and not otherwise
defined herein shall have the meaning ascribed to such terms in the Credit
Agreement. In the event the Credit Agreement is terminated or the Commitments of
the Lenders under the Credit Agreement have expired or been terminated prior to
the termination of this Agreement, capitalized terms used in this Agreement and
not otherwise defined herein shall have the meaning ascribed to such terms in
the Credit Agreement immediately prior to such termination or expiration.


                  B. The Company and the Collateral Agent have executed and
delivered the Company Collateral Documents to secure the obligations of the
Company under the Credit Agreement.

                  C. The Parent Guarantor has executed and delivered the Parent
Guaranty contained in the Credit Agreement and Akron Holding Corporation, an
Ohio corporation, Alpart Jamaica Inc., a Delaware corporation, Kaiser Alumina
Australia Corporation, a Delaware corporation, Kaiser Aluminium International,
Inc., a Delaware corporation, Kaiser Aluminum & Chemical Investment, Inc., a
Delaware corporation, Kaiser Aluminum Properties, Inc., a Delaware corporation,
Kaiser Aluminum Technical Services, Inc., a California corporation, Kaiser
Finance Corporation, a Delaware corporation, Kaiser Jamaica Corporation, a
Delaware corporation, Oxnard Forge Die Company, Inc., a California corporation,
Kaiser Micromill Holdings, LLC, a limited liability company organized under the
laws of Delaware, Kaiser Sierra Micromills, LLC, a limited liability company
organized under the laws of Delaware, Kaiser Texas Sierra Micromills, LLC, a
limited liability company organized under the laws of Texas, Kaiser Texas
Micromill Holdings, LLC, a limited liability company organized under the laws of
Texas, Kaiser Bellwood Corporation, a Delaware corporation, and Kaiser
Transaction Corp., a Delaware corporation (collectively the "Subsidiary
Guarantors"), have executed the Subsidiary Guaranty, in each case for the
purpose of guarantying the obligations of the Company under the Credit Agreement
and the other Loan Documents.

                  D. The Parent Guarantor and the Collateral Agent have executed
and delivered the Parent Collateral Documents to secure the obligations of the
Parent Guarantor under the Parent Guaranty, and certain of the Subsidiary
Guarantors, certain other Subsidiaries of the Company and the Collateral Agent
have executed and delivered the Subsidiary Collateral Documents to secure the
obligations of such Subsidiaries under the Subsidiary Guaranty and of the
Company under the Credit Agreement and the other Loan Documents.

                  E. The Company, the Parent Guarantor, the Lenders and the
Collateral Agent have entered into a First Amendment to Credit Agreement dated
as of July 21, 1994 pursuant to which the Company is permitted to enter into
Currency Hedge Agreements from time to time with the Currency Hedge Providers;
provided the remaining amount (or the Dollar Equivalent (as defined in the
Credit Agreement) thereof) of all currency payments the Company is obligated to
make under all such Currency Hedge Agreements does not exceed $300,000,000 in
the aggregate at any time.

                  F. In addition, the Company, the Parent Guarantor, certain of
the Subsidiary Guarantors, certain other Subsidiaries of the Company and the
Collateral Agent have entered into amendments dated as of July 21, 1994 to
certain of the Collateral Documents and the Subsidiary Guaranty in order to (i)
provide for the guaranty by the Parent Guarantor and the Subsidiary Guarantors
of the Company's obligations under the Currency Hedge Agreements and (ii) secure
the obligations of the Company under the Currency Hedge Agreements and the
obligations of the Parent Guarantor and such Subsidiaries with respect to the
Currency Hedge Obligations by the Collateral.

                  G. The Lenders and the Currency Hedge Providers agreed that
the Lien on the Collateral in favor of the Currency Hedge Providers shall be
subordinate to the Lien on the Collateral in favor of the Lenders and the
Lenders, the Currency Hedge Providers and the Collateral Agent entered into an
Intercreditor Agreement dated as of July 21, 1994 establishing such priority
(the "Existing Intercreditor Agreement").

                  H. In addition, the Company, the Parent Guarantor, certain of
the Subsidiary Guarantors, certain other Subsidiaries of the Company and the
Collateral Agent have entered into amendments dated as of the date hereof to
certain of the Collateral Documents and the Subsidiary Guaranty in order to (i)
provide for the guaranty by the Parent Guarantor and the Subsidiary Guarantors
of the Company's obligations in respect of the Cash Management Services and (ii)
secure the obligations of the Company in respect of the Cash Management Services
and the obligations of the Parent Guarantor and such Subsidiaries with respect
to the Cash Management Obligations by the Collateral.

                  I. The Lenders, the Currency Hedge Providers and the Cash
Management Providers have agreed that the Lien on the Collateral in favor of the
Cash Management Providers shall be subordinate to the Lien on the Collateral in
favor of the Lenders and the Currency Hedge Providers.

                  J. The Lenders, the Currency Hedge Providers, the Cash
Management Providers and the Collateral Agent desire to amend and restate the
Existing Intercreditor Agreement and set forth their agreements concerning the
Collateral.

                  NOW, THEREFORE, in consideration of the mutual covenants,
agreements and undertakings contained herein, the parties hereto agree that the
Existing Intercreditor Agreement is hereby amended and restated in its entirety
as follows:

                  1. Definitions. When used in this Agreement, the following
capitalized terms shall have the meanings set forth below. Terms defined
elsewhere in this Agreement are used as so defined.

                  (a) "Bank of America" means Bank of America, N.A. (successor
to BankAmerica Business Credit, Inc., a Delaware corporation).

                  (b) "Bank Obligations" means all liabilities and obligations
of the Company, the Parent Guarantor and each Obligor arising under or in
connection with the Credit Agreement and the other Loan Documents, including,
without limitation, all costs and expenses of the Collateral Agent and the
Lenders payable thereunder. The term "Bank Obligations" does not include the
Currency Hedge Obligations or the Cash Management Obligations.

                  (c) "Cash Management Obligations" means all liabilities and
obligations of the Company arising in connection with the Cash Management
Services, including, without limitation, all costs and expenses of the Cash
Management Providers payable in connection therewith.

                  (d) "Cash Management Pro Rata Share" means, with respect to
any Cash Management Provider, a fraction, expressed as a percentage, (i) the
numerator of which is the remaining Dollar amount of all payments that the
Company is obligated to make in respect of all Cash Management Services then
being provided by such Cash Management Provider and (ii) the denominator of
which is the remaining Dollar amount of all payments that the Company is
obligated to make in respect of all Cash Management Services.

                  (e) "Collateral Agreements" means the Company Collateral
Documents, the Parent Collateral Documents, the Subsidiary Collateral Documents,
the Parent Guaranty and the Subsidiary Guaranty.

                  (f) "Creditors" means the Lenders, the Currency Hedge
Providers and the Cash Management Providers.

                  (g) "Currency Hedge Obligations" means all liabilities and
obligations of the Company arising under or in connection with the Currency
Hedge Agreements, including, without limitation, all costs and expenses of the
Currency Hedge Providers payable thereunder.

                  (h) "Currency Hedge Pro Rata Share" means, with respect to any
Currency Hedge Provider, a fraction, expressed as a percentage, (i) the
numerator of which is the remaining Dollar amount (or the Dollar Equivalent
thereof) of all currency payments that the Company is obligated to make under
all Currency Hedge Agreements to which such Currency Hedge Provider is a party
(other than payments in respect of Subordinated Currency Hedge Obligations) and
(ii) the denominator of which is the remaining Dollar amount (or the Dollar
Equivalent thereof) of all currency payments that the Company is obligated to
make under all Currency Hedge Agreements (other than payments in respect of
Subordinated Currency Hedge Obligations).

                  (i) "Obligations" means and includes all of the Bank
Obligations, all of the Currency Hedge Obligations and all of the Cash
Management Obligations.

                  (j) "Required Cash Management Providers" means, at any time,
Cash Management Providers the sum of whose Cash Management Pro Rata Shares
equals at least 67%.

                  (k) "Required Currency Hedge Providers" means, at any time,
Currency Hedge Providers the sum of whose Currency Hedge Pro Rata Shares and
Subordinated Currency Hedge Pro Rata Shares equals at least 67%.

                  (l) "Subordinated Currency Hedge Obligations" means, as to any
Currency Hedge Provider, (i) if the Lien on the Collateral securing any Currency
Hedge Obligation owing to such Currency Hedge Provider is subordinated to any
Lien on the Collateral to which the Lien on the Collateral securing all Currency
Hedge Obligations is not also subordinated and amounts payable in respect of
such Currency Hedge Obligation are permitted to be netted against other Currency
Hedge Obligations owing to such Currency Hedge Provider, all Currency Hedge
Obligations owing to such Currency Hedge Provider and (ii) if the Lien on the
Collateral securing any Currency Hedge Obligation owing to such Currency Hedge
Provider is subordinated to any Lien on the Collateral to which the Lien on the
Collateral securing all Currency Hedge Obligations is not also subordinated (the
"Subordinated Obligation") and all rights to net amounts payable in respect of
the Subordinated Obligation against amounts payable in respect of all other
Currency Hedge Obligations owing to such Currency Hedge Provider have been
waived, the Subordinated Obligation.

                  (m) "Subordinated Currency Hedge Pro Rata Share" means, with
respect to any Currency Hedge Provider, a fraction, expressed as a percentage,
(i) the numerator of which is the remaining Dollar amount (or the Dollar
Equivalent thereof) of all currency payments that the Company is obligated to
make under all Currency Hedge Agreements to which such Currency Hedge Provider
is a party in respect of Subordinated Currency Hedge Obligations and (ii) the
denominator of which is the remaining Dollar amount (or the Dollar Equivalent
thereof) of all currency payments that the Company is obligated to make under
all Currency Hedge Agreements in respect of Subordinated Currency Hedge
Obligations.

                  2. Agreement by Currency Hedge Providers to Subordinate Liens.
The Lenders and the Currency Hedge Providers agree that the Liens on the
Collateral in favor of any Currency Hedge Provider securing the Currency Hedge
Obligations shall be and hereby are subordinate to the Liens on the Collateral
in favor of the Lenders securing the Bank Obligations and that each Currency
Hedge Provider's rights and remedies with respect to any Collateral shall be and
hereby are subordinate to the rights and remedies of the Lenders with respect
thereto in accordance with the terms hereof. Each Currency Hedge Provider agrees
that until the Bank Obligations have been paid in full, including the deposit of
available funds in an amount equal to the then aggregate Letter of Credit
Outstandings in the L/C Collateral Account in accordance with Section 5.8 of the
Credit Agreement and the Commitments of the Lenders under the Credit Agreement
have expired or been terminated, (a) no Currency Hedge Provider shall exercise
any right or remedy or assert any claims, in each case, with respect to any
Collateral, including, without limitation, seeking to foreclose on its junior
security interests therein pursuant to the terms of the Collateral Documents, as
a judgment creditor or otherwise and (b) no Currency Hedge Provider shall have
any right individually to seek to realize upon the security granted by or any
guaranty provided by any Collateral Agreement, it being understood and agreed
that such rights and remedies may be exercised solely by the Collateral Agent
for the benefit of the Currency Hedge Providers in accordance with the terms of
this Agreement and the Collateral Agreements. Notwithstanding the foregoing, (i)
the Currency Hedge Providers shall be entitled to demand and retain all payments
made by the Company from time to time under the Currency Hedge Agreements
notwithstanding the fact that such payments constitute a transfer of cash
Collateral and (ii) the Currency Hedge Providers shall be entitled to file a
proof of claim with respect to the Currency Hedge Obligations in any proceedings
under Title 11 of the United States Code by or against the Company, the Parent
Guarantor or any Subsidiary of the Company. If any Lien described in this
Agreement is determined to be avoidable under federal bankruptcy or applicable
state law, the priority granted such Lien in this Section 2 shall automatically
be void and ineffective and this Agreement automatically shall cease to apply to
such avoidable Lien.

                  3. Agreement by Cash Management Providers to Subordinate
Liens. The Lenders, the Currency Hedge Providers and the Cash Management
Providers agree that the Liens on the Collateral in favor of any Cash Management
Provider securing the Cash Management Obligations shall be and hereby are
subordinate to the Liens on the Collateral in favor of the Lenders securing the
Bank Obligations and the Currency Hedge Providers securing the Currency Hedge
Obligations and that each Cash Management Provider's rights and remedies with
respect to any Collateral shall be and hereby are subordinate to the rights and
remedies of the Lenders and the Currency Hedge Providers with respect thereto in
accordance with the terms hereof. Each Cash Management Provider agrees that
until the Bank Obligations and the Currency Hedge Obligations have been paid in
full, including the deposit of available funds in an amount equal to the then
aggregate Letter of Credit Outstandings in the L/C Collateral Account in
accordance with Section 5.8 of the Credit Agreement and the Commitments of the
Lenders under the Credit Agreement have expired or been terminated, (a) no Cash
Management Provider shall exercise any right or remedy or assert any claims, in
each case, with respect to any Collateral, including, without limitation,
seeking to foreclose on its junior security interests therein pursuant to the
terms of the Collateral Documents, as a judgment creditor or otherwise and (b)
no Cash Management Provider shall have any right individually to seek to realize
upon the security granted by or any guaranty provided by any Collateral
Agreement, it being understood and agreed that such rights and remedies may be
exercised solely by the Collateral Agent for the benefit of the Cash Management
Providers in accordance with the terms of this Agreement and the Collateral
Agreements. Notwithstanding the foregoing, (i) the Cash Management Providers
shall be entitled to demand and retain all payments made by the Company from
time to time in connection with the Cash Management Services notwithstanding the
fact that such payments constitute a transfer of cash Collateral and (ii) the
Cash Management Providers shall be entitled to file a proof of claim with
respect to the Cash Management Obligations in any proceedings under Title 11 of
the United States Code by or against the Company, the Parent Guarantor or any
Subsidiary of the Company. If any Lien described in this Agreement is determined
to be avoidable under federal bankruptcy or applicable state law, the priority
granted such Lien in this Section 3 shall automatically be void and ineffective
and this Agreement automatically shall cease to apply to such avoidable Lien.

                  4. Allocation of Proceeds. The Proceeds of any Collateral, or
of the disposition by the Collateral Agent of any of the Collateral (including
insurance benefits) shall be applied by the Collateral Agent, in the following
order of priority:

                  First, to the payment of the costs and expenses of such
disposition, including the reasonable costs and out-of-pocket expenses of the
Collateral Agent and attorneys' fees and costs and out-of-pocket expenses of
counsel (including allocated costs of in-house counsel) employed in connection
therewith and to the payment of all advances made by the Collateral Agent for
the account of any Obligor under the Collateral Agreements and to the payment of
all reasonable costs and out-of-pocket expenses incurred by the Collateral Agent
in connection with the administration and enforcement of this Agreement and the
Collateral Agreements, to the extent that such advances, costs and expenses
shall not have been reimbursed to the Collateral Agent;

                  Second, toward the satisfaction of the Bank Obligations other
than Obligations in respect of principal and Reimbursement Obligations;

                  Third, toward the satisfaction of the Bank Obligations in
respect of principal and Reimbursement Obligations, including the deposit of
available funds in an amount equal to the then aggregate Letter of Credit
Outstandings in the L/C Collateral Account in accordance with Section 5.8 of the
Credit Agreement;

                  Fourth, toward the satisfaction of the Currency Hedge
Obligations (other than any Subordinated Currency Hedge Obligations) on a
ratable basis according to each Currency Hedge Provider's Currency Hedge Pro
Rata Share;

                  Fifth, toward the satisfaction of any Subordinated Currency
Hedge Obligations on a ratable basis according to each Currency Hedge Provider's
Subordinated Currency Hedge Pro Rata Share;

                  Sixth, toward the satisfaction of the Cash Management
Obligations on a ratable basis according to each Cash Management Provider's Cash
Management Pro Rata Share; provided, however, that no Proceeds of any U.S. Fixed
Assets (as defined in the Senior Indenture, the New Senior Indenture or the
Additional New Senior Indentures), or of the disposition by the Collateral Agent
of any U.S. Fixed Assets, shall be applied toward the satisfaction of Cash
Management Obligations constituting Indebtedness (as defined in the Senior
Indenture, the New Senior Indenture or the Additional New Senior Indentures);
and

                  Seventh, any surplus to be paid to each Obligor, their
respective successors and assigns, as their interests may appear, or as
otherwise required by law.

Each Currency Hedge Provider will, promptly upon the request of the Collateral
Agent from time to time, notify the Collateral Agent of the remaining Dollar
amount (or Dollar Equivalent thereof) of all currency payments that the
Company is obligated to make under all Currency Hedge Agreements to which such
Currency Hedge Provider is a party and of the amount payable by the Company upon
early termination of all Currency Hedge Agreements to which such Currency Hedge
Provider is a party. Each Cash Management Provider will, promptly upon the
request of the Collateral Agent from time to time, notify the Collateral Agent
of the amount of all payments that the Company is obligated to make in
connection with all Cash Management Services then being provided by such Cash
Management Provider. The Collateral Agent may rely without inquiry or
investigation on any such notices, which notices shall be conclusive and
binding, absent manifest error, for all purposes (including but not limited
to the distribution of funds) hereunder and under each of the Collateral
Agreements.

                  5. Certain Actions by Currency Hedge Providers Regarding the
Collateral. Unless and until the Bank Obligations have been paid in full,
including the deposit of available funds in an amount equal to the then
aggregate Letter of Credit Outstandings in the L/C Collateral Account in
accordance with Section 5.8 of the Credit Agreement and the Commitments of the
Lenders under the Credit Agreement have expired or been terminated, (i) the
Currency Hedge Providers shall have no right or authority to direct any action
or inaction by the Collateral Agent and (ii) notwithstanding the provisions of
Section 4 hereof, each Currency Hedge Provider authorizes the Collateral Agent,
without the further consent of the Currency Hedge Providers, to consent to the
sale, transfer or other disposition by the Obligors of all or any part of the
Collateral in accordance with the Credit Agreement or the Collateral Agreements
free and clear of the Liens of the Lenders and the Currency Hedge Providers;
provided that the Lien of the Currency Hedge Providers shall, subject to the
priorities established in Section 2 hereof, attach to any and all Proceeds
thereof unless (A) such sale, transfer or other disposition is also undertaken
free and clear of all Liens of the Lenders, and (B) no portion of the Proceeds
thereof is subject to the continued Lien of the Lenders or required to be
applied to any of the Bank Obligations.

                  6. Certain Actions by Cash Management Providers Regarding the
Collateral. Unless and until the Bank Obligations and the Currency Hedge
Obligations have been paid in full, including the deposit of available funds in
an amount equal to the then aggregate Letter of Credit Outstandings in the L/C
Collateral Account in accordance with Section 5.8 of the Credit Agreement and
the Commitments of the Lenders under the Credit Agreement have expired or been
terminated, (i) the Cash Management Providers shall have no right or authority
to direct any action or inaction by the Collateral Agent and (ii)
notwithstanding the provisions of Section 4 hereof, each Cash Management
Provider authorizes the Collateral Agent, without the further consent of the
Cash Management Providers, to consent to the sale, transfer or other disposition
by the Obligors of all or any part of the Collateral in accordance with the
Credit Agreement or the Collateral Agreements free and clear of the Liens of the
Lenders, the Currency Hedge Providers and the Cash Management Providers;
provided that the Lien of the Cash Management Providers shall, subject to the
priorities established in Section 3 hereof, attach to any and all Proceeds
thereof unless (A) such sale, transfer or other disposition is also undertaken
free and clear of all Liens of the Lenders and the Currency Hedge Providers, and
(B) no portion of the Proceeds thereof is subject to the continued Lien of the
Lenders or the Currency Hedge Providers or required to be applied to any of the
Bank Obligations or any of the Currency Hedge Obligations.

                  7. Foreclosure Proceedings. In any foreclosure proceeding
concerning any Collateral, each holder of an Obligation if bidding for its own
account or for its own account and the accounts of other Creditors is prohibited
from including in the amount of its bid an amount to be applied as a credit
against the Obligations held by it or the Obligations held by the other
Creditors; instead, such holder must bid in cash only. However, in any such
foreclosure proceeding, the Collateral Agent may (but shall not be obligated to)
submit a bid for all Creditors in the form of a credit against the Obligations.
If in any foreclosure proceedings concerning any Collateral the Collateral
Agent, any Lender, any Currency Hedge Provider or any Cash Management Provider
accepts a transfer, conveyance or assignment of title to any of the Collateral,
it shall accept such transfer, conveyance or assignment of title only for the
benefit of all of the Creditors.

                  8. Independent Rights of the Lenders. The Collateral Agent and
the Lenders may, at any time and from time to time, without the consent of or
notice to any Currency Hedge Provider or any Cash Management Provider, and
without impairing or releasing the obligations of the Currency Hedge Providers
or the Cash Management Providers hereunder (a) change the manner, place or terms
of payment or change or extend the time of payment of, or renew, increase or
alter, the Bank Obligations or the security therefor, or otherwise amend (or
direct the Collateral Agent to amend) in any manner any of the Loan Documents;
(b) exercise or refrain from exercising any rights against the Company and
others; (c) apply any sums by whomsoever paid or however realized to the Bank
Obligations; (d) sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any Property whatsoever and by
whomsoever at any time pledged or mortgaged to secure, or however securing, any
Bank Obligations; (e) release anyone liable in any manner for the payment or
collection of any Bank Obligations; and (f) settle or compromise all or any part
of the Bank Obligations. Except as provided in Section 2 hereof, no invalidity,
irregularity or unenforceability of all or any part of the Bank Obligations or
of any of the Liens securing the Bank Obligations shall affect, impair or be a
defense to this Agreement.

                  9. Independent Rights of the Currency Hedge Providers. The
Currency Hedge Providers may, at any time and from time to time, without the
consent of or notice to any Cash Management Provider, and without impairing or
releasing the obligations of the Cash Management Providers hereunder (a) change
the manner, place or terms of payment or change or extend the time of payment
of, or renew, increase or alter, the Currency Hedge Obligations or the security
therefor, or otherwise amend in any manner any of the Currency Hedge Agreements;
(b) exercise or refrain from exercising any rights against the Company and
others; (c) apply any sums by whomsoever paid or however realized to the
Currency Hedge Obligations; (d) sell, exchange, release, surrender, realize upon
or otherwise deal with in any manner and in any order any Property whatsoever
and by whomsoever at any time pledged or mortgaged to secure, or however
securing, any Currency Hedge Obligations; (e) release anyone liable in any
manner for the payment or collection of any Currency Hedge Obligations; and (f)
settle or compromise all or any part of the Currency Hedge Obligations. Except
as provided in Section 3 hereof, no invalidity, irregularity or unenforceability
of all or any part of the Currency Hedge Obligations or of any of the Liens
securing the Currency Hedge Obligations shall affect, impair or be a defense to
this Agreement.

                  10. Defaults Under Currency Hedge Obligations. Nothing
contained in this Agreement shall restrict or impair the right or power of any
Currency Hedge Provider to declare a default, an Event of Default (as defined in
any Currency Hedge Agreement) or a termination event when such Currency Hedge
Provider deems it appropriate under and in accordance with the terms of the
applicable Currency Hedge Agreement or to net amounts payable under Currency
Hedge Obligations owing to such Currency Hedge Provider; provided, however, such
declaration or termination shall not permit any Currency Hedge Provider to
exercise any rights with respect to, or to realize on, the Collateral, except as
specifically provided herein. Any Currency Hedge Provider declaring a default,
an Event of Default (as defined in any Currency Hedge Agreement) or a
termination event shall promptly notify the Collateral Agent by telephone, and
confirm such act in writing, within three (3) Business Days, in the manner set
forth in Section 20 hereof; provided, however, that any failure by any Currency
Hedge Lender to so notify the Collateral Agent shall not affect the validity of
any such declaration or termination.

                  11. Defaults Under Cash Management Obligations. Nothing
contained in this Agreement shall restrict or impair the right or power of any
Cash Management Provider to declare a default when such Cash Management Provider
deems it appropriate in respect of the applicable Cash Management Services;
provided, however, such declaration shall not permit any Cash Management
Provider to exercise any rights with respect to, or to realize on, the
Collateral, except as specifically provided herein. Any Cash Management Provider
declaring a default shall promptly notify the Collateral Agent by telephone, and
confirm such act in writing, within three (3) Business Days, in the manner set
forth in Section 20 hereof; provided, however, that any failure by any Cash
Management Provider to so notify the Collateral Agent shall not affect the
validity of any such declaration or termination.

                  12. Effect of Bankruptcy. This Agreement shall remain in full
force and effect notwithstanding the filing of a petition for relief by or
against the Company, the Parent Guarantor or any Subsidiary of the Company under
Title 11 of the United States Code and shall apply with full force and effect
with respect to all Collateral acquired by the Company, the Parent Guarantor or
any Subsidiary of the Company, or obligations incurred by the Company to any
Creditor under the Credit Agreement, the Currency Hedge Agreements, the
Collateral Agreements or in respect of the Cash Management Services subsequent
to the date of any such petition.

                  13. Appointment of Collateral Agent by Lenders. Pursuant to
Article XI of the Credit Agreement, the Lenders have appointed Bank of America
as agent under and for purposes of the Credit Agreement and the other Loan
Documents. The Lenders hereby confirm such appointment on the terms and
conditions set forth in the Credit Agreement and appoint Bank of America as
their agent for purposes of this Agreement on the same terms and conditions.
Nothing contained in this Agreement is intended to amend the terms of the Credit
Agreement relating to the rights and duties of the Collateral Agent and the
Lenders as provided in the Credit Agreement and to the extent that the terms of
this Agreement are inconsistent with the Credit Agreement, the Credit Agreement
shall govern.

                  14. Appointment of Collateral Agent by Currency Hedge
Providers.

                  (a) Each Currency Hedge Provider hereby appoints Bank of
America as its agent under and for purposes of this Agreement and the Collateral
Agreements. Each Currency Hedge Provider irrevocably authorizes, and each
assignee of any Currency Hedge Provider shall be deemed to authorize, the
Collateral Agent to act on behalf of such Currency Hedge Provider under this
Agreement and the Collateral Agreements and each Currency Hedge Provider
irrevocably authorizes the Collateral Agent to take such actions on its behalf
and to exercise such powers hereunder and thereunder as are in each case
specifically delegated to or required of the Collateral Agent by the terms
hereof or thereof, together which such powers as may be reasonably incidental
thereto.

                  (b) Each Currency Hedge Provider hereby acknowledges and
agrees that the Collateral Agent is the agent for the Lenders under the Credit
Agreement and that nothing contained in this Agreement, or in the appointment of
Bank of America as Collateral Agent, is intended to limit or restrict, in any
manner, the Collateral Agent's rights and discretion when acting in its capacity
as agent for the Lenders under the Credit Agreement, regardless of any effect
the exercise of such rights and discretion may have on the Currency Hedge
Providers. In addition, each Currency Hedge Provider hereby acknowledges and
agrees that until the Bank Obligations have been paid in full, including the
deposit of available funds in an amount equal to the then aggregate Letter of
Credit Outstandings in the L/C Collateral Account in accordance with Section 5.8
of the Credit Agreement and the Commitments of the Lenders under the Credit
Agreement have expired or been terminated, the Collateral Agent may act as
Majority Lenders, Required Lenders or all Lenders, as the case may be, may
request and that neither the Collateral Agent nor any Lender shall have any
liability to any Currency Hedge Provider with respect to any such request.

                  (c) The Collateral Agent shall not have by reason of this
Agreement or any Collateral Agreement a fiduciary relationship in respect of any
Currency Hedge Provider; and nothing in this Agreement or any Collateral
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Collateral Agent any obligations in respect of this Agreement or
any Collateral Agreement except as expressly set forth herein or therein.

                  (d) The Collateral Agent shall be deemed not to have knowledge
of the occurrence of a default, an Event of Default (as defined in any Currency
Hedge Agreement) or a termination event under any Currency Hedge Agreement, or
any breach of any of the Collateral Agreements unless, in each case, it shall
have received written notice thereof from a Currency Hedge Provider or from the
Company. Each Currency Hedge Provider acknowledges and agrees that the existence
of a default, an Event of Default (as defined in any Currency Hedge Agreement)
or a termination event under any Currency Hedge Agreement may not give rise to a
Default under the Credit Agreement and to the extent that such default, Event of
Default (as defined in any Currency Hedge Agreement) or termination event would
give rise to a Default under the Credit Agreement would not in any event
obligate the Collateral Agent or the Lenders to declare an Event of Default
under the Credit Agreement or cease extending credit to the Company thereunder.

                  (e) Bank of America and its successor as the Collateral Agent
shall have the same rights and powers with respect to the Currency Hedge
Agreements entered into by it or any of its Affiliates as any other Currency
Hedge Provider and may exercise the same as if it were not the Collateral Agent.
The terms "Currency Hedge Provider" and "Currency Hedge Providers" as used
herein shall include the Collateral Agent in its individual capacity.

                  (f) Each Currency Hedge Provider acknowledges that it has,
independently of the Collateral Agent, each Lender, each Cash Management
Provider and each other Currency Hedge Provider, and based on such Currency
Hedge Provider's review of the financial information of the Company and such
other documents, information, and investigations as such Currency Hedge Provider
has deemed appropriate, made its own credit decision to enter into a Currency
Hedge Agreement. Each Currency Hedge Provider also acknowledges that it will,
independently of the Collateral Agent, each Lender, each Cash Management
Provider and each other Currency Hedge Provider, and based on such other
documents, information, and investigations as it shall deem appropriate at any
time, continue to make its own credit decisions as to exercising or not
exercising from time to time any rights and privileges available to it under
this Agreement, any Collateral Agreement or any Currency Hedge Agreement.

                  15. Appointment of Collateral Agent by Cash Management
Providers.

                  (a) Each Cash Management Provider hereby appoints Bank of
America as its agent under and for purposes of this Agreement and the Collateral
Agreements. Each Cash Management Provider irrevocably authorizes, and each
assignee of any Cash Management Provider shall be deemed to authorize, the
Collateral Agent to act on behalf of such Cash Management Provider under this
Agreement and the Collateral Agreements and each Cash Management Provider
irrevocably authorizes the Collateral Agent to take such actions on its behalf
and to exercise such powers hereunder and thereunder as are in each case
specifically delegated to or required of the Collateral Agent by the terms
hereof or thereof, together which such powers as may be reasonably incidental
thereto.

                  (b) Each Cash Management Provider hereby acknowledges and
agrees that the Collateral Agent is the agent for the Lenders under the Credit
Agreement and the Currency Hedge Providers and that nothing contained in this
Agreement, or in the appointment of Bank of America as Collateral Agent, is
intended to limit or restrict, in any manner, the Collateral Agent's rights and
discretion when acting in its capacity as agent for the Lenders under the Credit
Agreement or the Currency Hedge Providers, regardless of any effect the exercise
of such rights and discretion may have on the Cash Management Providers. In
addition, each Cash Management Provider hereby acknowledges and agrees that
until the Bank Obligations and the Currency Hedge Obligations have been paid in
full, including the deposit of available funds in an amount equal to the then
aggregate Letter of Credit Outstandings in the L/C Collateral Account in
accordance with Section 5.8 of the Credit Agreement and the Commitments of the
Lenders under the Credit Agreement have expired or been terminated, the
Collateral Agent may act as Majority Lenders, Required Lenders, all Lenders or
Required Currency Hedge Providers, as the case may be, may request and that
neither the Collateral Agent nor any Lender shall have any liability to any Cash
Management Provider with respect to any such request.

                  (c) The Collateral Agent shall not have by reason of this
Agreement or any Collateral Agreement a fiduciary relationship in respect of any
Cash Management Provider; and nothing in this Agreement or any Collateral
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Collateral Agent any obligations in respect of this Agreement or
any Collateral Agreement except as expressly set forth herein or therein.

                  (d) The Collateral Agent shall be deemed not to have knowledge
of the occurrence of a default in respect of any Cash Management Services, or
any breach of any of the Collateral Agreements unless, in each case, it shall
have received written notice thereof from a Cash Management Provider or from the
Company. Each Cash Management Provider acknowledges and agrees that the
existence of a default in respect of any Cash Management Services may not give
rise to a Default under the Credit Agreement and to the extent that such default
would give rise to a Default under the Credit Agreement would not in any event
obligate the Collateral Agent or the Lenders to declare an Event of Default
under the Credit Agreement or cease extending credit to the Company thereunder.

                  (e) Bank of America and its successor as the Collateral Agent
shall have the same rights and powers with respect to the Cash Management
Services provided by it or any of its Affiliates as any other Cash Management
Provider and may exercise the same as if it were not the Collateral Agent. The
terms "Cash Management Provider" and "Cash Management Providers" as used herein
shall include the Collateral Agent in its individual capacity.

                  (f) Each Cash Management Provider acknowledges that it has,
independently of the Collateral Agent, each Lender, each Currency Hedge Provider
and each other Cash Management Provider, and based on such Cash Management
Provider's review of the financial information of the Company and such other
documents, information, and investigations as such Cash Management Provider has
deemed appropriate, made its own credit decision to provide Cash Management
Services. Each Cash Management Provider also acknowledges that it will,
independently of the Collateral Agent, each Lender, each Currency Hedge Provider
and each other Cash Management Provider, and based on such other documents,
information, and investigations as it shall deem appropriate at any time,
continue to make its own credit decisions as to exercising or not exercising
from time to time any rights and privileges available to it under this
Agreement, any Collateral Agreement or in respect of any Cash Management
Services.

                  16. The Collateral Agent.

                  (a) The Collateral Agent shall, at all times prior to the
payment in full of the Bank Obligations and the expiration or termination of the
Commitments of the Lenders under the Credit Agreement, be the same Person that
is the Agent under the Credit Agreement. Written notice of resignation by the
Agent pursuant to Section 11.4 of the Credit Agreement shall also constitute
notice of resignation as the Collateral Agent under this Agreement; removal of
the Agent pursuant to Section 11.4 of the Credit Agreement, and appointment of a
successor Agent pursuant to Section 11.4 of the Credit Agreement, shall also
constitute appointment of a successor Collateral Agent hereunder and such
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges, and duties of the retiring or removed Collateral
Agent under this Agreement. After any retiring or removed Collateral Agent's
resignation or removal hereunder as Collateral Agent, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was the Collateral Agent hereunder.
After the payment in full of the Bank Obligations and the expiration or
termination of the Commitments of the Lenders under the Credit Agreement, the
Required Currency Hedge Providers may appoint one of the Currency Hedge
Providers or a commercial banking institution organized under the laws of the
United States (or any state thereof) or a United States branch or agency of a
foreign commercial banking institution, and having a combined capital and
surplus of at least $500,000,000, as a successor Collateral Agent which shall
thereupon become the Collateral Agent hereunder. After the payment in full of
the Bank Obligations, the expiration or termination of the Commitments of the
Lenders under the Credit Agreement and the payment in full of the Currency Hedge
Obligations, the Required Cash Management Providers may appoint one of the Cash
Management Providers or a commercial banking institution organized under the
laws of the United States (or any state thereof) or a United States branch or
agency of a foreign commercial banking institution, and having a combined
capital and surplus of at least $500,000,000, as a successor Collateral Agent
which shall thereupon become the Collateral Agent hereunder.

                  (b) Whenever the Collateral Agent shall deem it necessary or
prudent in order either to conform to any law of any jurisdiction in which all
or any part of the Collateral shall be situated or to make any claim or bring
any suit with respect to the Collateral or the Collateral Documents, or in the
event that the Collateral Agent shall have been requested to do so by Majority
Lenders, Required Lenders or all Lenders, as the case may be, or, following the
payment in full of the Bank Obligations, including the deposit of available
funds in an amount equal to the aggregate Letter of Credit Outstandings in the
L/C Collateral Account in accordance with Section 5.8 of the Credit Agreement
and the expiration or termination of the Commitments of the Lenders under the
Credit Agreement, the Required Currency Hedge Providers, or, following the
payment in full of the Currency Hedge Obligations, the Required Cash Management
Providers, the Collateral Agent shall execute and deliver a supplemental
agreement and all other instruments and agreements necessary or proper to
constitute another bank or trust company, or one or more Persons approved by the
Collateral Agent, either to act as Collateral Agent or agents with respect to
all or any part of the Collateral, in any such case with such powers of the
Collateral Agent as may be provided in such supplemental agreement, and to vest
in such bank, trust company or Person as such Collateral Agent or separate
trustee, as the case may be, any Property, title, right, or power of the
Collateral Agent deemed necessary or advisable.

                  (c) (i) To the extent that the Collateral Agent becomes
concerned that the exercise of any remedies or any action taken or omitted to be
taken by it in connection with any Collateral shall subject it to the
possibility of any liability, cost, or expense which it deems to be significant,
arising under any law, rules, or regulations relating to hazardous or toxic
wastes or materials, the Collateral Agent may, without liability to any Currency
Hedge Provider or any Cash Management Provider or other party to this Agreement
or any Collateral Agreement, or any other Person, decline to accept, abandon,
forfeit, or release such Collateral regardless of any effect such declination,
abandonment, forfeiture, or release may have upon the Currency Hedge Providers
or the Cash Management Providers, or otherwise, if either (A) the Collateral
Agent is requested to decline to accept, abandon, forfeit, or release such
Collateral by Majority Lenders, Required Lenders or all Lenders, as the case may
be, or following the payment in full of the Bank Obligations, including the
deposit of available funds in an amount equal to the then aggregate Letter of
Credit Outstandings into the L/C Collateral Account in accordance with Section
5.8 of the Credit Agreement and the expiration or termination of the Commitments
of the Lenders under the Credit Agreement, the Required Currency Hedge
Providers, or, following the payment in full of all Currency Hedge Obligations,
the Required Cash Management Providers or (B) the Collateral Agent is not,
within thirty (30) days after making a specific proposal therefor, specifically
indemnified to its satisfaction by the Lenders, the Currency Hedge Providers or
the Cash Management Providers, as the case may be, or insured to its
satisfaction by a third party or parties for any liability, costs, and expenses
which might result therefrom.

                  (ii) In addition, if the Collateral Agent becomes concerned
that the inclusion of certain Property in the Collateral is not in the best
interests of the Collateral Agent or the Creditors, either because of potential
adverse legal implications (including the potential effects of California's "one
form of action", "anti-deficiency" and related rules of law which may apply in
connection with real property located in California) or potential liabilities,
costs, or expenses which the Collateral Agent deems to be significant that may
be imposed upon a Person secured by such Collateral, the Collateral Agent may,
without liability to any Currency Hedge Provider, any Cash Management Provider
or other party to this Agreement or any Collateral Agreement, or any other
Person, decline to accept, abandon, forfeit, or release such Collateral
regardless of any effect such declination, abandonment, forfeiture, or release
may have upon the Creditors or otherwise unless (A) the Collateral Agent is
requested to do otherwise by Majority Lenders, Required Lenders or all Lenders,
as the case may be, or, following the payment in full of the Bank Obligations,
including the deposit of available funds in an amount equal to the then
aggregate Letter of Credit Outstandings into the L/C Collateral Account in
accordance with Section 5.8 of the Credit Agreement and the expiration or
termination of the Commitments of the Lenders under the Credit Agreement, the
Required Currency Hedge Providers, or, following the payment in full of all
Currency Hedge Obligations, the Required Cash Management Providers and (B) the
Collateral Agent is, within thirty (30) days after making a specific proposal
therefor, specifically indemnified to its satisfaction by the Lenders, the
Currency Hedge Providers or the Cash Management Providers, as the case may be,
or insured to its satisfaction by a third party or parties for any liability,
costs, and expenses which might result therefrom.

                  17. Reliance. The Collateral Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person and upon
advice and statements of legal counsel (which may be counsel for the Company),
independent accountants and other experts selected by the Collateral Agent. The
Collateral Agent shall not be required in any way to determine the identity or
authority of any Person delivering or executing the same.

                  18. Waiver of Rights of Currency Hedge Providers; Prohibition
on Contesting Liens. The Currency Hedge Providers irrevocably waive any right to
compel the Lenders to marshal assets of the Company, the Parent Guarantor, or
any Subsidiary of the Company or to object to the manner in which the Lenders
may seek to enforce the Liens granted in any of the Collateral, including,
without limitation, any right based on any duty to conduct any sale, lease,
exchange, transfer or other disposition of Collateral in a commercially
reasonable manner. The Currency Hedge Providers agree that they will not (and
waive any right to) contest or support any other Person in contesting, in any
action or proceeding or otherwise (including, without limitation, any federal or
state bankruptcy, insolvency or liquidation proceeding), the priority, validity
or enforceability of the Bank Obligations or any Lien held by the Lenders. In
addition, the Currency Hedge Providers agree that they will not (and waive any
right to) seek to have any Currency Hedge Obligation or any payment thereunder
characterized as an administrative expense or any other expense or claim that
would permit the payment thereof prior to the payment of the secured claims of
the Lenders in any federal or state bankruptcy, insolvency or liquidation
proceeding; provided, however, that nothing contained herein shall be deemed to
be a waiver of any right of any Currency Hedge Provider to obtain relief under
Section 507(b) of Title 11 of the United States Code.

                  19. Waiver of Rights of Cash Management Providers; Prohibition
on Contesting Liens. The Cash Management Providers irrevocably waive any right
to compel the Lenders or the Currency Hedge Providers to marshal assets of the
Company, the Parent Guarantor, or any Subsidiary of the Company or to object to
the manner in which the Lenders or the Currency Hedge Providers may seek to
enforce the Liens granted in any of the Collateral, including, without
limitation, any right based on any duty to conduct any sale, lease, exchange,
transfer or other disposition of Collateral in a commercially reasonable manner.
The Cash Management Providers agree that they will not (and waive any right to)
contest or support any other Person in contesting, in any action or proceeding
or otherwise (including, without limitation, any federal or state bankruptcy,
insolvency or liquidation proceeding), the priority, validity or enforceability
of the Bank Obligations or any Lien held by the Lenders or the Currency Hedge
Obligations or any Lien held by the Currency Hedge Providers. In addition, the
Cash Management Providers agree that they will not (and waive any right to) seek
to have any Cash Management Obligation or any payment thereunder characterized
as an administrative expense or any other expense or claim that would permit the
payment thereof prior to the payment of the secured claims of the Lenders or the
Currency Hedge Providers in any federal or state bankruptcy, insolvency or
liquidation proceeding; provided, however, that nothing contained herein shall
be deemed to be a waiver of any right of any Cash Management Provider to obtain
relief under Section 507(b) of Title 11 of the United States Code.

                  20. Notices. Except as otherwise provided herein, all notices
and other communications provided to any party hereto under this Agreement shall
be in writing or by telex or by facsimile (followed promptly thereby by mailing
of such notice or communication) and addressed, delivered, or transmitted to
such party at its address, telex, or facsimile number set forth on the signature
pages hereof, or at such other address, telex, or facsimile number as may be
designated by such party in a notice to the other parties. Any notice, if
delivered by hand or if sent by mail or by overnight courier properly addressed
with postage prepaid, shall be deemed given when received; any notice, if
transmitted by telex or facsimile, shall be deemed given when transmitted
(answerback confirmed in the case of telexes).

                  21. Modification, Amendment. No amendment to, modification or
waiver of, or consent with respect to, any provision of this Agreement shall in
any event be effective unless the same shall be in writing and signed and
delivered by the Collateral Agent, the Lenders, the Currency Hedge Providers and
the Cash Management Providers. Nothing contained in this Agreement, however,
shall be construed to require the approval of all Lenders, any Currency Hedge
Provider or any Cash Management Provider to any amendment to the Credit
Agreement or any of the Collateral Agreements.

                  22. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

                  23. Additional Currency Hedge Agreements and Cash Management
Services. Any Lender may secure Currency Hedge Obligations or Cash Management
Obligations by signing an acknowledgment in the form contained on the signature
pages hereof and by delivering a signed counterpart hereof to the Collateral
Agent by which each such Lender agrees to be bound by the terms of this
Agreement.

                  24. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Creditors, the Collateral Agent and their
respective trustees, receivers, successors and assigns; no other Person
(including but not limited to the Company), shall be entitled to rely on or
raise as a defense any provision of this Agreement in any manner whatsoever.

                  25. Transferees. No Currency Hedge Provider shall sell, assign
or transfer any of its Liens on the Collateral securing Currency Hedge
Obligations or any interest in the Currency Hedge Obligations except to another
Currency Hedge Provider. No Cash Management Provider shall sell, assign or
transfer any of its Liens on the Collateral securing Cash Management Obligations
or any interest in the Cash Management Obligations except to another Cash
Management Provider.

                  26. Governing Law. This Agreement shall be deemed to be a
contract made under and governed by the internal laws of the State of New York.

                  27. Execution in Counterparts. This Agreement may be executed
by the parties hereto in several counterparts and by the different parties on
separate counterparts, each of which shall be deemed to be an original, and all
of which shall constitute together but one and the same Agreement; signature
pages may be detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are physically attached to the
same document.

                  28. Termination. This Agreement shall continue in full force
and effect until the payment in full of the Obligations and (a) the Commitments
of the Lenders under the Credit Agreement have expired or have terminated, (b)
all of the Currency Hedge Agreements have terminated and (c) the provision of
Cash Management Services has been terminated.

                  29. Further Assurances. The Creditors shall each execute and
deliver to the Collateral Agent such other and further documents and instruments
(in recordable form, if requested) as may be necessary or desirable to implement
fully or evidence further the provisions of this Agreement.

                  30. Acknowledgments by Lenders and Currency Hedge Providers.
The Lenders and the Currency Hedge Providers acknowledge the following:

                  (a) Amendments to the UCC-1 Financing Statements filed
pursuant to Section 7.1.6 of the Credit Agreement were filed;

                  (b) Endorsements to all title insurance policies issued to the
Lenders pursuant to Section 7.1.8 of the Credit Agreement were issued in favor
of the Currency Hedge Providers with respect to the Currency Hedge Obligations;
and

                  (c) The Company has agreed with the Lenders that it will not
enter into any Currency Hedge Agreement containing any provision that permits
the Currency Hedge Provider party thereto to terminate the Currency Hedge
Agreement, or liquidate or close-out any obligations thereunder, solely as a
result of the occurrence of any Default under the Credit Agreement unless the
Agent, as a result of such Default and upon the direction of the Majority
Lenders, shall have declared all of the outstanding principal amount of the
Loans and other Bank Obligations to be due and payable.

                  31. Acknowledgments by Lenders, Currency Hedge Providers and
Cash Management Providers. The Lenders, the Currency Hedge Providers and the
Cash Management Providers acknowledge the following:

                  (a) Amendments to the UCC-1 Financing Statements filed
pursuant to Section 7.1.6 of the Credit Agreement, substantially in the form of
Annex I hereto, with such changes, additions or deletions as the Agent, in its
sole and absolute discretion, may approve, may be filed; and

                  (b) Endorsements to all title insurance policies issued to the
Lenders pursuant to Section 7.1.8 of the Credit Agreement may be issued in favor
of the Cash Management Providers with respect to the Cash Management
Obligations.

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the date first set forth above.

                                            BANK OF AMERICA, N.A. (successor to BankAmerica
                                            Business Credit, Inc.), as Collateral Agent

                                            By:
                                            Name:
                                            Its:
                                            Address:          55 South Lake Avenue, Suite 900
                                                              Pasadena, CA 91101


                                            BANK OF AMERICA, N.A. (successor to BankAmerica
                                            Business Credit, Inc.), as a Lender

                                            By:
                                            Name:
                                            Its:
                                            Address:          55 South Lake Avenue, Suite 900
                                                              Pasadena, CA 91101

                                            CONGRESS FINANCIAL CORPORATION
                                            (WESTERN), as a Lender

                                            By:
                                            Name:
                                            Title:
                                            Address:          225 South Lake Avenue
                                                              Office #1000
                                                              Pasadena, CA 91101

                                            LA SALLE BANK NATIONAL ASSOCIATION,
                                             as a Lender

                                            By:
                                            Name:
                                            Title:
                                            Address:          120 S. La Salle Street
                                                              5th Floor
                                                              Chicago, IL 60603

                                            THE CIT GROUP/BUSINESS CREDIT, INC.,
                                            as a Lender

                                            By:
                                            Name:
                                            Title:
                                            Address:          2110 Walnut Hill Lane
                                                              Irving, TX 75038

                                            TRANSAMERICA BUSINESS CREDIT
                                            CORPORATION, as a Lender

                                            By:
                                            Name:
                                            Title:
                                            Address:          8750 West Bryn Mawr Avenue
                                                              Suite 720
                                                              Chicago, IL 60631

                                            HELLER FINANCIAL INC., as a Lender

                                            By:
                                            Name:
                                            Title:
                                            Address:          101 Park Avenue
                                                              New York, NY 10178

                                            ABN AMRO BANK N.V., as a Lender

                                            By:
                                            Name:
                                            Title:

                                            By:
                                            Name:
                                            Title:
                                            Address:          101 California Street
                                                              Suite 4550
                                                              San Francisco, CA 94111

                                            LA SALLE BANK NATIONAL ASSOCIATION,
                                            as a Currency Hedge Provider

                                            By:
                                            Name:
                                            Title:
                                            Address:          120 S. La Salle Street
                                                              5th Floor
                                                              Chicago, IL 60603

                                            BANK OF AMERICA, N.A. (successor to
                                            Bank of America National Trust and Savings
                                            Association), as a Currency Hedge
                                            Provider

                                            By:
                                            Name:
                                            Title:
                                            Address:          555 California Street
                                                              41st Floor
                                                              San Francisco, CA 94104



                                                                                                                                                                                                      ABN AMRO BANK N.V., as a Currency Hedge Provider
                                            By:
                                            Name:
                                            Title:

                                            By:
                                            Name:
                                            Title:
                                            Address:          101 California Street
                                                              Suite 4550
                                                              San Francisco, CA 94111

                                            BANK OF AMERICA, N.A., as a Cash Management
                                            Provider

                                            By:
                                            Name:
                                            Title:
                                            Address:          555 California Street
                                                              41st Floor
                                                              San Francisco, CA 94104


                                 ACKNOWLEDGMENT

                  The undersigned may enter into a Currency Hedge Agreement with
the Company pursuant to which Currency Hedge Obligations thereunder are to be
secured by the Collateral Agreements. The undersigned acknowledges the terms of
this Agreement and agrees to be bound hereby.

                                            ___________________, as a Currency Hedge Provider

                                            By:
                                            Name:
                                            Title:

                                            Address:

                                 ACKNOWLEDGMENT

                  The undersigned may provide Cash Management Services to the
Company and the related Cash Management Obligations are to be secured by the
Collateral Agreements. The undersigned acknowledges the terms of this Agreement
and agrees to be bound hereby.

                                            ___________________, as a Cash Management Provider

                                            By:
                                            Name:
                                            Title:

                                            Address:


                                   EXHIBIT II

                  THIRD AMENDMENT TO PARENT SECURITY AGREEMENT


                  THIS THIRD AMENDMENT TO PARENT SECURITY AGREEMENT (this
"Amendment"), dated as of December 27, 2000, is by and between Kaiser Aluminum
Corporation, a Delaware corporation (the "Parent Guarantor"), and Bank of
America, N.A. (successor to BankAmerica Business Credit, Inc., a Delaware
corporation), as agent for the Secured Lenders (in such capacity, together with
its successors and assigns in such capacity, the "Agent"). Capitalized terms
used, but not defined, herein shall have the meanings given to such terms in the
Credit Agreement, as amended by the Nineteenth Amendment.

                              W I T N E S S E T H:

                  WHEREAS, Kaiser Aluminum & Chemical Corporation (the
"Company"), the Parent Guarantor, the various financial institutions that are or
may from time to time become parties to the Credit Agreement (collectively, the
"Lenders" and, individually, a "Lender"), and the Agent are parties to the
Credit Agreement, dated as of February 15, 1994, as amended by the First
Amendment to Credit Agreement, dated as of July 21, 1994, the Second Amendment
to Credit Agreement, dated as of March 10, 1995, the Third Amendment to Credit
Agreement and Acknowledgment, dated as of July 20, 1995, the Fourth Amendment to
Credit Agreement, dated as of October 17, 1995, the Fifth Amendment to Credit
Agreement, dated as of December 11, 1995, the Sixth Amendment to Credit
Agreement, dated as of October 1, 1996, the Seventh Amendment to Credit
Agreement, dated as of December 17, 1996, the Eighth Amendment to Credit
Agreement, dated as of February 24, 1997, the Ninth Amendment to Credit
Agreement and Acknowledgment, dated as of April 21, 1997, the Tenth Amendment to
Credit Agreement, dated as of June 25, 1997, the Eleventh Amendment to Credit
Agreement and Limited Waivers, dated as of October 20, 1997, the Twelfth
Amendment to Credit Agreement, dated as of January 13, 1998, the Thirteenth
Amendment to Credit Agreement, dated as of July 20, 1998, the Fourteenth
Amendment to Credit Agreement, dated as of December 11, 1998, the Fifteenth
Amendment to Credit Agreement, dated as of February 23, 1999, the Sixteenth
Amendment to Credit Agreement, dated as of March 26, 1999, the Seventeenth
Amendment to Credit Agreement, dated as of September 24, 1999, and the
Eighteenth Amendment to Credit Agreement, dated as of February 11, 2000 (the
"Credit Agreement"); and

                  WHEREAS, as of the date hereof the Company, the Parent
Guarantor, the Lenders and the Agent are entering into a Nineteenth Amendment to
Credit Agreement and Limited Waiver (the "Nineteenth Amendment"); and

                  WHEREAS, the Parent Guarantor and the Agent are parties to the
Parent Security Agreement, Financing Statement, and Conditional Assignment of
Patents and Trademarks, dated as of February 15, 1994, as amended by the First
Amendment to Parent Security Agreement, dated as of July 21, 1994, and the
Second Amendment to Parent Security Agreement, dated as of April 21, 1997 (the
"Parent Security Agreement"), and have agreed to amend the Parent Security
Agreement as herein provided; and

                  WHEREAS, the Required Lenders have consented to the execution
and delivery of this Amendment by the Agent;

                  NOW, THEREFORE, the parties hereto agree as follows:

                  Section 1.  Amendment to Parent Security Agreement.

                  Clause (a)(iii) of Section 11 of the Parent Security Agreement
is hereby amended by amending the final sentence thereof to read in its entirety
as follows:

                  "Any Proceeds of any Collateral, or of the disposition by the
                  Agent of any of the Collateral (including benefits to the
                  extent provided in Section 19 hereof), shall be applied by the
                  Agent, in the following order of priority:

                           First, to payment of the costs and expenses of such
                  disposition, including the reasonable costs and out-of-pocket
                  expenses of the Agent and attorneys' fees and costs and
                  out-of-pocket expenses of counsel (including allocated costs
                  of in-house counsel) employed in connection therewith and to
                  the payment of all advances made by the Agent for the account
                  of the Parent Guarantor hereunder and the payment of all
                  reasonable costs and out-of-pocket expenses incurred by the
                  Agent in connection with the administration and enforcement of
                  this Agreement, to the extent that such advances, costs, and
                  expenses shall not have been reimbursed to the Agent;

                           Second, toward the satisfaction of the Secured
                  Obligations other than Obligations in respect of principal and
                  Reimbursement Obligations, Currency Hedge Obligations and Cash
                  Management Obligations;

                           Third, toward the satisfaction of the Secured
                  Obligations in respect of principal and Reimbursement
                  Obligations, including the deposit of available funds in an
                  amount equal to the then aggregate Letter of Credit
                  Outstandings in the L/C Collateral Account in accordance with
                  Section 5.8 of the Credit Agreement;

                           Fourth, toward the satisfaction of the Currency Hedge
                  Obligations in the order agreed to by the Currency Hedge
                  Providers from time to time;

                           Fifth, toward the satisfaction of the Cash Management
                  Obligations in the order agreed to by the Cash Management
                  Providers from time to time; and

                           Sixth, any surplus to be paid to the Parent
                  Guarantor, its successors and assigns, or as a court of
                  competent jurisdiction may direct."

                  Section 2.  Parent Guarantor's Representations and Warranties.

                  In order to induce the Agent to enter into this Amendment and
to amend the Parent Security Agreement in the manner provided herein, and to
induce the Required Lenders to consent to such action by the Agent, the Parent
Guarantor represents and warrants to each Lender and the Agent that, as of the
Nineteenth Amendment Effective Date (as defined in the Nineteenth Amendment)
after giving effect to the effectiveness of this Amendment, the following
statements are true and correct in all material respects:

                  A. Authorization of Agreements. The execution and delivery of
this Amendment by the Parent Guarantor and the performance of the Parent
Security Agreement as amended by this Amendment (the "Amended Agreement") by the
Parent Guarantor are within the Parent Guarantor's corporate powers and have
been duly authorized by all necessary corporate action on the part of the Parent
Guarantor.

                  B. No Conflict. The execution and delivery by the Parent
Guarantor of this Amendment and the performance by the Parent Guarantor of the
Amended Agreement do not: (1) contravene the Parent Guarantor's Organic
Documents; (2) contravene the Senior Indenture, the New Senior Indenture, the
Additional New Senior Indentures or the Subordinated Indenture, or contravene
any other contractual restriction where such a contravention has a reasonable
possibility of having a Materially Adverse Effect or contravene any law or
governmental regulation or court decree or order binding on or affecting the
Parent Guarantor or any of its Subsidiaries; or (3) result in, or require the
creation or imposition of, any Lien on any of the Parent Guarantor's properties,
other than pursuant to the Loan Documents.

                  C. Binding Obligation. This Amendment has been duly executed
and delivered by the Parent Guarantor and this Amendment and the Amended
Agreement constitute the legal, valid and binding obligations of the Parent
Guarantor, enforceable against the Parent Guarantor in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally and by general principles of equity.

                  D. Governmental Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance of this Amendment by the Parent Guarantor.

                  Section 3. Miscellaneous.

                  A. Reference to and Effect on the Parent Security Agreement
and the Other Loan Documents.

                       (1) On and after the Nineteenth Amendment Effective Date, each
reference in the Parent Security Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Parent Security
Agreement, and each reference in the other Loan Documents to the "Parent
Security Agreement", "thereunder", "thereof" or words of like import referring
to the Parent Security Agreement shall mean and be a reference to the Amended
Agreement.

                       (2) Except as specifically amended by this Amendment, the Parent
Security Agreement shall remain in full force and effect and is hereby ratified
and confirmed.

                       (3) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any provision of,
or operate as a waiver of any right, power or remedy of the Agent or any Lender
under, the Parent Security Agreement.

                  B. Applicable Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO SUCH LAWS RELATING TO CONFLICTS OF LAWS.

                  C. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provision hereof.

                  D. Counterparts. This Amendment may be executed by the parties
hereto in several counterparts and by the different parties on separate
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.

                  E. Severability. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Amendment
or affecting the validity or enforceability of such provisions in any other
jurisdiction.

                  IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered as of the day and year first above written.

KAISER ALUMINUM CORPORATION              BANK OF AMERICA, N.A.
                                         (successor to
                                         BankAmerica Business Credit, Inc.), as Agent

By:                                      By:
Name Printed:                            Name Printed:
Its:                                     Its:


                                   EXHIBIT III

                   THIRD AMENDMENT TO COMPANY PLEDGE AGREEMENT


                  THIS THIRD AMENDMENT TO COMPANY PLEDGE AGREEMENT (this
"Amendment"), dated as of December 27, 2000, is by and between Kaiser Aluminum &
Chemical Corporation, a Delaware corporation (the "Company"), and Bank of
America, N.A. (successor to BankAmerica Business Credit, Inc., a Delaware
corporation), as agent for the Secured Lenders (in such capacity, together with
its successors and assigns in such capacity, the "Agent"). Capitalized terms
used, but not defined, herein shall have the meanings given to such terms in the
Credit Agreement, as amended by the Nineteenth Amendment.

                              W I T N E S S E T H:

                  WHEREAS, the Company, Kaiser Aluminum Corporation, the various
financial institutions that are or may from time to time become parties to the
Credit Agreement (collectively, the "Lenders" and, individually, a "Lender"),
and the Agent are parties to the Credit Agreement, dated as of February 15,
1994, as amended by the First Amendment to Credit Agreement, dated as of July
21, 1994, the Second Amendment to Credit Agreement, dated as of March 10, 1995,
the Third Amendment to Credit Agreement and Acknowledgment, dated as of July 20,
1995, the Fourth Amendment to Credit Agreement, dated as of October 17, 1995,
the Fifth Amendment to Credit Agreement, dated as of December 11, 1995, the
Sixth Amendment to Credit Agreement, dated as of October 1, 1996, the Seventh
Amendment to Credit Agreement, dated as of December 17, 1996, the Eighth
Amendment to Credit Agreement, dated as of February 24, 1997, the Ninth
Amendment to Credit Agreement and Acknowledgment, dated as of April 21, 1997,
the Tenth Amendment to Credit Agreement, dated as of June 25, 1997, the Eleventh
Amendment to Credit Agreement and Limited Waivers, dated as of October 20, 1997,
the Twelfth Amendment to Credit Agreement, dated as of January 13, 1998, the
Thirteenth Amendment to Credit Agreement, dated as of July 20, 1998, the
Fourteenth Amendment to Credit Agreement, dated as of December 11, 1998, the
Fifteenth Amendment to Credit Agreement, dated as of February 23, 1999, the
Sixteenth Amendment to Credit Agreement, dated as of March 26, 1999, the
Seventeenth Amendment to Credit Agreement, dated as of September 24, 1999, and
the Eighteenth Amendment to Credit Agreement, dated as of February 11, 2000 (the
"Credit Agreement"); and

                  WHEREAS, as of the date hereof the Company, the Parent
Guarantor, the Lenders and the Agent are entering into a Nineteenth Amendment to
Credit Agreement and Limited Waiver (the "Nineteenth Amendment"); and

                  WHEREAS, the Company and the Agent are parties to the Company
Pledge Agreement, dated as of February 15, 1994, as amended by the First
Amendment to Company Pledge Agreement, dated as of July 21, 1994, the Second
Amendment to Company Pledge Agreement, dated as of July 20, 1995, and Pledge
Amendments, dated as of July 20, 1995, December 11, 1995, June 25, 1997 and
February 24, 1999 (the "Company Pledge Agreement"), and have agreed to amend the
Company Pledge Agreement as herein provided; and

                  WHEREAS, the Required Lenders have consented to the execution
and delivery of this Amendment by the Agent;

                  NOW, THEREFORE, the parties hereto agree as follows:

                  Section 1.  Amendment to Company Pledge Agreement.

                  Section 2.2 of the Company Pledge Agreement is hereby amended
to read in its entirety as follows:

                  "SECTION 2.2. Secured Obligations. This Agreement secures, and
                  the Collateral is collateral security for, the prompt payment
                  or performance in full when due, whether at stated maturity,
                  by required prepayment, declaration, acceleration, demand, or
                  otherwise (including the payment of amounts that would become
                  due but for the operation of the automatic stay under Section
                  362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)) of, all
                  Obligations of the Pledgor now existing or hereafter arising
                  under or in connection with the Credit Agreement or any other
                  Loan Document, all Obligations of the Pledgor now existing or
                  hereafter arising under or in connection with the Currency
                  Hedge Agreements, all Obligations of the Pledgor now existing
                  or hereafter arising in connection with the Cash Management
                  Services, and any and all extensions or renewals thereof,
                  whether for principal, interest (including interest that, but
                  for the filing of a petition in bankruptcy with respect to the
                  Pledgor, would accrue on such Obligations), reimbursements of
                  amounts drawn under Letters of Credit, fees, expenses,
                  indemnities, or otherwise, whether voluntary or involuntary,
                  direct or indirect, absolute or contingent, liquidated or
                  unliquidated, whether or not jointly owed with others, whether
                  or not from time to time decreased or extinguished and later
                  increased, created, or incurred, and all or any portion of
                  such Obligations that are paid, to the extent all or any part
                  of such payment is avoided or recovered directly or indirectly
                  from the Agent or any Secured Lender as a preference,
                  fraudulent transfer, or otherwise, and any and all Obligations
                  of the Pledgor now or hereafter existing under this Agreement,
                  whether for advances, costs, fees, expenses, or otherwise
                  (collectively, the 'Secured Obligations')."

                  Section 2. Company's Representations and Warranties.

                  In order to induce the Agent to enter into this Amendment and
to amend the Company Pledge Agreement in the manner provided herein, and to
induce the Lenders to consent to such action by the Agent, the Company
represents and warrants to each Lender and the Agent that, as of the Nineteenth
Amendment Effective Date (as defined in the Nineteenth Amendment) after giving
effect to effectiveness of this Amendment, the following statements are true and
in all material respects:

                  A. Authorization of Agreements. The execution and delivery of
this Amendment by the Company and the performance of the Company Pledge
Agreement as amended by this Amendment (the "Amended Agreement") by the Company
are within the Company's corporate powers and have been duly authorized by all
necessary corporate action on the part of the Company.

                  B. No Conflict. The execution and delivery by the Company of
this Amendment and the performance by the Company of the Amended Agreement do
not:

                           (1)      contravene the Company's Organic Documents;

                           (2)      contravene the Senior Indenture, the New
Senior Indenture, the Additional New Senior Indentures or the Subordinated
Indenture or contravene any other contractual restriction where such a
contravention has a reasonable possibility of having a Materially Adverse Effect
or contravene any law or governmental regulation or court decree or order
binding on or affecting the Company or any of its Subsidiaries; or

                           (3)      result in, or require the creation or
imposition of, any Lien on any of the Company's properties, other than pursuant
to the Loan Documents.

                  C. Binding Obligation. This Amendment has been duly executed
and delivered by the Company and this Amendment and the Amended Agreement
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally and by general principles of
equity.

                  D. Governmental Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance of this Amendment by the Company.

                  Section 3. Miscellaneous.

                  A. Reference to and Effect on the Company Pledge Agreement and
the Other Loan Documents.

                  (1) On and after the Nineteenth Amendment Effective Date, each
reference in the Company Pledge Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Company Pledge
Agreement, and each reference in the other Loan Documents to the "Company Pledge
Agreement", "thereunder", "thereof" or words of like import referring to the
Company Pledge Agreement shall mean and be a reference to the Amended Agreement.

                  (2) Except as specifically amended by this Amendment, the
Company Pledge Agreement shall remain in full force and effect and is hereby
ratified and confirmed.

                  (3) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of the Agent
or any Lender under, the Company Pledge Agreement.

                  B. Applicable Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO SUCH LAWS RELATING TO CONFLICTS OF LAWS.

                  C. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provision hereof.

                  D. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts and by the different parties on separate
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.

                  E. Severability. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Amendment
or affecting the validity or enforceability of such provisions in any other
jurisdiction.

                  IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered as of the day and year first above written.

KAISER ALUMINUM & CHEMICAL                 BANK OF AMERICA, N.A. (successor
   CORPORATION                                    to BankAmerica Business Credit,
                                                  Inc.), as Agent

By:                                            By:
Name Printed:                                  Name Printed:
Its:                                           Its:


                                   EXHIBIT IV
                  FIFTH AMENDMENT TO COMPANY SECURITY AGREEMENT

                  THIS FIFTH AMENDMENT TO COMPANY SECURITY AGREEMENT (this
"Amendment"), dated as of December 27, 2000, is by and between Kaiser Aluminum
& Chemical Corporation, a Delaware corporation (the "Company"), and Bank of
America, N.A. (successor to BankAmerica Business Credit, Inc., a Delaware
corporation), as agent for the Secured Lenders (in such capacity, together with
its successors and assigns in such capacity, the "Agent"). Capitalized terms
used, but not defined, herein shall have the meanings given to such terms in the
Credit Agreement, as amended by the Nineteenth Amendment.

                              W I T N E S S E T H:

                  WHEREAS, the Company, Kaiser Aluminum Corporation, a Delaware
corporation (the "Parent Guarantor"), the various financial institutions that
are or may from time to time become parties to the Credit Agreement
(collectively, the "Lenders" and, individually, a "Lender"), and the Agent are
parties to the Credit Agreement, dated as of February 15, 1994, as amended by
the First Amendment to Credit Agreement, dated as of July 21, 1994, the Second
Amendment to Credit Agreement, dated as of March 10, 1995, the Third Amendment
to Credit Agreement and Acknowledgment, dated as of July 20, 1995, the Fourth
Amendment to Credit Agreement, dated as of October 17, 1995, the Fifth Amendment
to Credit Agreement, dated as of December 11, 1995, the Sixth Amendment to
Credit Agreement, dated as of October 1, 1996, the Seventh Amendment to Credit
Agreement, dated as of December 17, 1996, the Eighth Amendment to Credit
Agreement, dated as of February 24, 1997, the Ninth Amendment to Credit
Agreement and Acknowledgment, dated as of April 21, 1997, the Tenth Amendment to
Credit Agreement, dated as of June 25, 1997, the Eleventh Amendment to Credit
Agreement and Limited Waivers, dated as of October 20, 1997, the Twelfth
Amendment to Credit Agreement, dated as of January 13, 1998, the Thirteenth
Amendment to Credit Agreement, dated as of July 20, 1998, the Fourteenth
Amendment to Credit Agreement, dated as of December 11, 1998, the Fifteenth
Amendment to Credit Agreement, dated as of February 23, 1999, the Sixteenth
Amendment to Credit Agreement, dated as of March 26, 1999, the Seventeenth
Amendment to Credit Agreement, dated as of September 24, 1999, and the
Eighteenth Amendment to Credit Agreement, dated as of February 11, 2000 (the
"Credit Agreement"); and

                  WHEREAS, as of the date hereof the Company, the Parent
Guarantor, the Lenders and the Agent are entering into a Nineteenth Amendment to
Credit Agreement and Limited Waiver (the "Nineteenth Amendment"); and

                  WHEREAS, the Company and the Agent are parties to the Company
Security Agreement, Financing Statement and Conditional Assignment of Patents
and Trademarks, dated as of February 15, 1994, as amended by the First Amendment
to Company Security Agreement, dated as of July 21, 1994, the Second Amendment
to Company Security Agreement, dated as of December 11, 1995, the Third
Amendment to Company Security Agreement dated as of April 21, 1997, and the
Fourth Amendment to Company Security Agreement, dated as of July 20, 1998 (the
"Company Security Agreement"), and have agreed to amend the Company Security
Agreement as herein provided; and

                  WHEREAS, the Required Lenders have consented to the execution
and delivery of this Amendment by the Agent;

                  NOW, THEREFORE, the parties hereto agree as follows:

                  Section 1.   Amendment to Company Security Agreement.


                  A.       Section 2 of the Company Security Agreement is hereby
         amended by adding the following as the second proviso of the first
         paragraph thereof:

                  "; provided further that, notwithstanding anything in this
                  Agreement or in any other Loan Document to the contrary, (i)
                  with respect to any Cash Management Obligation constituting
                  Indebtedness (as defined in the Senior Indenture, the New
                  Senior Indenture or the Additional New Senior Indentures), the
                  Collateral shall not include any U.S. Fixed Assets (as defined
                  in the Senior Indenture, the New Senior Indenture or the
                  Additional New Senior Indentures) and (ii) no Proceeds of any
                  U.S. Fixed Assets, or of the disposition by the Agent of any
                  U.S. Fixed Assets, shall be applied toward the satisfaction of
                  any Cash Management Obligations constituting Indebtedness (as
                  defined in the Senior Indenture, the New Senior Indenture or
                  the Additional New Senior Indentures)."

                  B. Section 3 of the Company Security Agreement is hereby
amended by inserting the phrase "all Obligations of the Company now existing or
hereafter arising in connection with Cash Management Services," following the
phrase "Currency Hedge Agreements" contained therein.

                  C.   Clause (a)(iii) of Section 11 of the Company Security
Agreement is hereby amended by amending the final sentence thereof to read in
its entirety as follows:

                  "Any Proceeds of any Collateral, or of the disposition by the
                  Agent of any of the Collateral (including benefits to the
                  extent provided in Section 19 hereof), shall be applied by the
                  Agent, in the following order of priority:

                           First, to payment of the costs and expenses of such
                  disposition, including the reasonable costs and out-of-pocket
                  expenses of the Agent and attorneys' fees and costs and
                  out-of-pocket expenses of counsel (including allocated costs
                  of in-house counsel) employed in connection therewith and to
                  the payment of all advances made by the Agent for the account
                  of the Company hereunder and the payment of all reasonable
                  costs and out-of-pocket expenses incurred by the Agent in
                  connection with the administration and enforcement of this
                  Agreement, to the extent that such advances, costs, and
                  expenses shall not have been reimbursed to the Agent;

                           Second, toward the satisfaction of the Secured
                  Obligations other than Obligations in respect of principal and
                  Reimbursement Obligations, Currency Hedge Obligations and Cash
                  Management Obligations;

                           Third, toward the satisfaction of the Secured
                  Obligations in respect of principal and Reimbursement
                  Obligations, including the deposit of available funds in an
                  amount equal to the then aggregate Letter of Credit
                  Outstandings in the L/C Collateral Account in accordance with
                  Section 5.8 of the Credit Agreement;

                           Fourth, toward the satisfaction of the Currency Hedge
                  Obligations in the order agreed to by the Currency Hedge
                  Providers from time to time;

                           Fifth, subject to the provisions of the second
                  proviso of the first paragraph of Section 2, toward the
                  satisfaction of the Cash Management Obligations in the order
                  agreed to by the Cash Management Providers from time to time;
                  and

                           Sixth, any surplus to be paid to the Company, its
                  successors and assigns, or as a court of competent
                  jurisdiction may direct."

Section 2.    Company's Representations and Warranties.

                  In order to induce the Agent to enter into this Amendment and
to amend the Company Security Agreement in the manner provided herein, and to
induce the Required Lenders to consent to such action by the Agent, the Company
represents and warrants to each Lender and the Agent that, as of the Nineteenth
Amendment Effective Date (as defined in the Nineteenth Amendment) after giving
effect to the effectiveness of this Amendment, the following statements are true
and correct in all material respects:

         A. Authorization of Agreements. The execution and delivery of this
Amendment by the Company and the performance of the Company Security Agreement
as amended by this Amendment (the "Amended Agreement") by the Company are within
the Company's corporate powers and have been duly authorized by all necessary
corporate action on the part of the Company.

         B. No Conflict. The execution and delivery by the Company of this
Amendment and the performance by the Company of the Amended Agreement do not

                  (1)      contravene the Company's Organic Documents;

                  (2) contravene the Senior Indenture, the New Senior Indenture,
the Additional New Senior Indentures, or the Subordinated Indenture or
contravene any other contractual restriction where such a contravention has a
reasonable possibility of having a Materially Adverse Effect or contravene any
law or governmental regulation or court decree or order binding on or affecting
the Company or any of its Subsidiaries; or

                  (3) result in, or require the creation or imposition of, any
Lien on any of the Company's properties, other than pursuant to the Loan
Documents.

         C. Binding Obligation. This Amendment has been duly executed and
delivered by the Company and this Amendment and the Amended Agreement constitute
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally and by general principles of equity.

         D. Governmental Approval, Regulation, etc.  No authorization or approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body or other Person is required for the due execution, delivery
or performance of this Amendment by the Company.

Section 3.    Miscellaneous.

         A.   Reference to and Effect on the Company Security Agreement and the
Other Loan Documents.

                           (1) On and after the Nineteenth Amendment Effective
Date, each reference in the Company Security Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import referring to the Company
Security Agreement, and each reference in the other Loan Documents to the "Company
Security Agreement", "thereunder", "thereof" or words of like import referring
to the Company Security Agreement shall mean and be a reference to the Amended
Agreement.

                           (2) Except as specifically amended by this Amendment,
the Company Security Agreement shall remain in full force and effect and is hereby
ratified and confirmed.

                           (3) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy of the
Agent or any Lender under, the Company Security Agreement.

         B.   Applicable Law.  THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO SUCH LAWS RELATING TO
CONFLICTS OF LAWS.

         C.   Headings.  The various headings of this Amendment are inserted for
convenience only and shall not affect the meaning or interpretation of this
Amendment or any provision hereof.

         D.   Counterparts.  This Amendment may be executed by the parties
hereto in several counterparts and by the different parties on separate
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the
same document.

         E.   Severability.  Any provision of this Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Amendment
or affecting the validity or enforceability of such provisions in any other
jurisdiction.

                  IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered as of the day and year first above written.


KAISER ALUMINUM & CHEMICAL                              BANK OF AMERICA, N.A. (successor to
CORPORATION                                                 BankAmerica Business Credit, Inc.), as Agent

By:                                                         By:
Name:    David A. Cheadle                                   Name:    Michael J. Jasaitis
Its:     Assistant Treasurer                                Its:     Vice President


                                    EXHIBIT V

                     THIRD AMENDMENT TO SUBSIDIARY GUARANTY


                  THIS THIRD AMENDMENT TO SUBSIDIARY GUARANTY (this
"Amendment"), dated as of December 27, 2000, is by and between Akron Holding
Corporation, an Ohio corporation, Alpart Jamaica Inc., a Delaware corporation,
Kaiser Alumina Australia Corporation, a Delaware corporation, Kaiser Aluminium
International, Inc., a Delaware corporation, Kaiser Aluminum & Chemical
Investment, Inc., a Delaware corporation, Kaiser Aluminum Properties, Inc., a
Delaware corporation, Kaiser Aluminum Technical Services, Inc., a California
corporation, Kaiser Finance Corporation, a Delaware corporation, Kaiser Jamaica
Corporation, a Delaware corporation, Oxnard Forge Die Company, Inc., a
California corporation Kaiser Micromill Holdings, LLC, a limited liability
company organized under the laws of Delaware, Kaiser Sierra Micromills, LLC, a
limited liability company organized under the laws of Delaware, Kaiser Texas
Sierra Micromills, LLC, a limited liability company organized under the laws of
Texas, Texas Micromill Holdings, LLC, a limited liability company organized
under the laws of Texas, Kaiser Bellwood Corporation, a Delaware corporation,
and Kaiser Transaction Corp., a Delaware corporation (collectively, the
"Guarantors" and, individually, a "Guarantor"), and Bank of America, N.A.
(successor to BankAmerica Business Credit, Inc., a Delaware corporation), as
agent for the Secured Lenders (in such capacity, together with its successors
and assigns in such capacity, the "Agent"). Capitalized terms used, but
not defined, herein shall have the meanings given to such terms in the Credit
Agreement, as amended by the Nineteenth Amendment.

                              W I T N E S S E T H:

                  WHEREAS, Kaiser Aluminum & Chemical Corporation (the
"Company"), Kaiser Aluminum Corporation, the various financial institutions that
are or may from time to time become parties to the Credit Agreement
(collectively, the "Lenders" and, individually, a "Lender"), and the Agent are
parties to the Credit Agreement, dated as of February 15, 1994, as amended by
the First Amendment to Credit Agreement, dated as of July 21, 1994, the Second
Amendment to Credit Agreement, dated as of March 10, 1995, the Third Amendment
to Credit Agreement and Acknowledgment, dated as of July 20, 1995, the Fourth
Amendment to Credit Agreement, dated as of October 17, 1995, the Fifth Amendment
to Credit Agreement, dated as of December 11, 1995, the Sixth Amendment to
Credit Agreement, dated as of October 1, 1996, the Seventh Amendment to Credit
Agreement, dated as of December 17, 1996, the Eighth Amendment to Credit
Agreement, dated as of February 24, 1997, the Ninth Amendment to Credit
Agreement and Acknowledgment, dated as of April 21, 1997, the Tenth Amendment to
Credit Agreement, dated as of June 25, 1997, the Eleventh Amendment to Credit
Agreement and Limited Waivers, dated as of October 20, 1997, the Twelfth
Amendment to Credit Agreement, dated as of January 13, 1998, the Thirteenth
Amendment to Credit Agreement, dated as of July 20, 1998, the Fourteenth
Amendment to Credit Agreement, dated as of December 11, 1998, the Fifteenth
Amendment to Credit Agreement, dated as of February 23, 1999, the Sixteenth
Amendment to Credit Agreement, dated as of March 26, 1999, the Seventeenth
Amendment to Credit Agreement, dated as of September 24, 1999, and the
Eighteenth Amendment to Credit Agreement, dated as of February 11, 2000 (the
"Credit Agreement"); and

                  WHEREAS, as of the date hereof the Company, the Parent
Guarantor, the Lenders and the Agent are entering into a Nineteenth Amendment to
Credit Agreement and Limited Waiver (the "Nineteenth Amendment"); and

                  WHEREAS, the Guarantors and the Agent are parties to the
Subsidiary Guaranty, dated as of February 15, 1994, as amended by the First
Amendment to Subsidiary Guaranty, dated as of July 21, 1994, the Second
Amendment to Subsidiary Guaranty, dated as of December 11, 1995, and Supplements
to Subsidiary Guaranty, dated as of June 25, 1997 and February 23, 1999 (the
"Subsidiary Guaranty"), and have agreed to amend the Subsidiary Guaranty as
herein provided; and

                  WHEREAS, the Required Lenders have consented to the execution
and delivery of this Amendment by the Agent;

                  NOW, THEREFORE, the parties hereto agree as follows:

                  Section 1.  Amendment to Subsidiary Guaranty.

                  Section 2.1(a) of the Subsidiary Guaranty is hereby amended to
read in its entirety as follows:

                  "(a) guarantee the due and prompt performance and payment in
                  full when due, whether at stated maturity, by required
                  prepayment, declaration, acceleration, demand or otherwise and
                  at all times thereafter (including the payment of all amounts
                  that would become due but for the operation of the automatic
                  stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
                  Section 362(a)) of any and all Obligations of the Parent
                  Guarantor, the Company and their respective Subsidiaries,
                  whether now existing or hereafter made, incurred or created,
                  whether absolute or contingent, liquidated or unliquidated,
                  whether due or not due, whether for principal, interest
                  (including interest that, but for the filing of a petition in
                  bankruptcy with respect to the Parent Guarantor, the Company
                  or any of their respective Subsidiaries, would accrue on such
                  Obligations), fees, expenses, indemnities, or otherwise, and
                  however arising, under the Credit Agreement, the other Loan
                  Documents and the Currency Hedge Agreements and in connection
                  with the Cash Management Services, including those arising
                  under successive borrowing transactions under the Credit
                  Agreement which shall either continue the Obligations of the
                  Company or from time to time renew them after they have been
                  satisfied (the 'Company Obligations'); and"

                  Section 2. Guarantors' Representations and Warranties.

                  In order to induce the Agent to enter into this Amendment and
to amend the Subsidiary Guaranty in the manner provided herein, and to
induce the Required Lenders to consent to such action by the Agent, each
Guarantor represents and warrants to each Lender and the Agent that, as of the
Nineteenth Amendment Effective Date (as defined in the Nineteenth Amendment)
after giving effect to the effectiveness of this Amendment, the following
statements are true and correct in all material respects:

                  A. Authorization of Agreements. The execution and delivery of
this Amendment by such Guarantor and the performance of the Subsidiary Guaranty
as amended by this Amendment (the "Amended Agreement") by such Guarantor are
within such Guarantor's corporate powers and have been duly authorized by all
necessary corporate action on the part of such Guarantor.

                  B. No Conflict. The execution and delivery by such Guarantor
of this Amendment and the performance by such Guarantor of the Amended Agreement
do not:

                           (1)      contravene such Guarantor's Organic Documents;

                           (2)      contravene the Senior Indenture, the New
Senior Indenture, the Additional Senior Indentures or the Subordinated Indenture
or contravene any other contractual restriction where such a contravention has a
reasonable possibility of having a Materially Adverse Effect or contravene any
law or governmental regulation or court decree or order binding on or affecting
such Guarantor or any of its Subsidiaries; or

                           (3)      result in, or require the creation or
imposition of, any Lien on any of such Guarantor's properties, other than
pursuant to the Loan Documents.

                  C. Binding Obligation. This Amendment has been duly executed
and delivered by such Guarantor and this Amendment and the Amended Agreement
constitute the legal, valid and binding obligations of such Guarantor,
enforceable against such Guarantor in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally and by
general principles of equity.

                  D. Governmental Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance of this Amendment by such Guarantor.

                  Section 3. Miscellaneous.

                  A. Reference to and Effect on the Subsidiary Guaranty and the
Other Loan Documents.

                           (1) On and after the Nineteenth Amendment Effective Date,
each reference in the Subsidiary Guaranty to "this Guaranty", "hereunder",
"hereof", "herein" or words of like import referring to the Subsidiary Guaranty,
and each reference in the other Loan Documents to the "Subsidiary Guaranty",
"thereunder", "thereof" or words of like import referring to the Subsidiary
Guaranty shall mean and be a reference to the Amended Agreement.

                           (2) Except as specifically amended by this Amendment,
the Subsidiary Guaranty shall remain in full force and effect and is hereby
ratified and confirmed.

                           (3) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy of the
Agent or any Lender under, the Subsidiary Guaranty.

                  B. Applicable Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO SUCH LAWS RELATING TO CONFLICTS OF LAWS.

                  C. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provision hereof.

                  D. Counterparts. This Amendment may be executed by the parties
hereto in several counterparts and by the different parties on separate
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.

                  E. Severability. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Amendment
or affecting the validity or enforceability of such provisions in any other
jurisdiction.

                  IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered as of the day and year first above written.


AKRON HOLDING CORPORATION                            KAISER ALUMINUM & CHEMICAL
                                                              INVESTMENT, INC.

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER ALUMINUM PROPERTIES,                          KAISER ALUMINUM TECHNICAL
INC.                                                          SERVICES, INC.

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

OXNARD FORGE DIE COMPANY, INC.                       KAISER ALUMINIUM
                                                     INTERNATIONAL, INC.

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER ALUMINA AUSTRALIA                             KAISER FINANCE CORPORATION
CORPORATION

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

ALPART JAMAICA INC.                                  KAISER JAMAICA CORPORATION

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER MICROMILL HOLDINGS, LLC                       KAISER SIERRA MICROMILLS, LLC

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed: David A. Cheadle
Its:  Assistant Treasurer                            Its: Assistant Treasurer

KAISER TEXAS SIERRA MICROMILLS,                      KAISER TEXAS MICROMILL
LLC                                                  HOLDINGS, LLC

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER BELLWOOD CORPORATION                          KAISER TRANSACTION CORP.

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

BANK OF AMERICA, N.A. (successor to
BankAmerica Business Credit, Inc.), as Agent


By:
Name Printed:
Its:

                                   EXHIBIT VI

                FOURTH AMENDMENT TO SUBSIDIARY SECURITY AGREEMENT

                  THIS FOURTH AMENDMENT TO SUBSIDIARY SECURITY AGREEMENT
(this "Amendment"), dated as of December 27, 2000, is by and among Akron Holding
Corporation, an Ohio corporation, Kaiser Alumina Australia Corporation, a
Delaware corporation, Kaiser Aluminium International, Inc., a Delaware
corporation, Kaiser Aluminum & Chemical Investment, Inc., a Delaware
corporation, Kaiser Aluminum Properties, Inc., a Delaware corporation, Kaiser
Aluminum Technical Services, Inc., a California corporation, Kaiser Finance
Corporation, a Delaware corporation, Oxnard Forge Die Company, Inc., a
California corporation, Kaiser Micromill Holdings, LLC, a limited liability
company organized under the laws of Delaware, Kaiser Sierra Micromills, LLC, a
limited liability company organized under the laws of Delaware, Kaiser Texas
Sierra Micromills, LLC, a limited liability company organized under the laws of
Texas, Kaiser Texas Micromill Holdings, LLC, a limited liability company
organized under the laws of Texas, Kaiser Bellwood Corporation, a Delaware
corporation, and Kaiser Transaction Corp., a Delaware corporation (collectively,
the "Kaiser Subsidiaries" and individually a "Kaiser Subsidiary"), and Bank of
America, N.A. (successor to BankAmerica Business Credit, Inc., a Delaware
corporation), as agent for the Secured Lenders (in such capacity, together with
its successors and assigns in such capacity, the "Agent"). Capitalized terms
used, but not defined, herein shall have the meanings given to such terms in the
Credit Agreement, as amended by the Nineteenth Amendment.

                              W I T N E S S E T H:

                  WHEREAS, Kaiser Aluminum & Chemical Corporation, a Delaware
corporation (the "Company"), Kaiser Aluminum Corporation, a Delaware corporation
(the "Parent Guarantor"), the various financial institutions that are or may
from time to time become parties to the Credit Agreement (collectively, the
"Lenders" and, individually, a "Lender"), and the Agent are parties to the
Credit Agreement, dated as of February 15, 1994, as amended by the First
Amendment to Credit Agreement, dated as of July 21, 1994, the Second Amendment
to Credit Agreement, dated as of March 10, 1995, the Third Amendment to Credit
Agreement and Acknowledgment, dated as of July 20, 1995, the Fourth Amendment to
Credit Agreement, dated as of October 17, 1995, the Fifth Amendment to Credit
Agreement, dated as of December 11, 1995, the Sixth Amendment to Credit
Agreement, dated as of October 1, 1996, the Seventh Amendment to Credit
Agreement, dated as of December 17, 1996, the Eighth Amendment to Credit
Agreement, dated as of February 24, 1997, the Ninth Amendment to Credit
Agreement and Acknowledgment, dated as of April 21, 1997, the Tenth Amendment to
Credit Agreement and Assignment, dated as of June 25, 1997, the Eleventh
Amendment to Credit Agreement and Limited Waivers, dated as of October 20, 1997,
the Twelfth Amendment to Credit Agreement, dated as of January 13, 1998, the
Thirteenth Amendment to Credit Agreement, dated as of July 20, 1998, the
Fourteenth Amendment to Credit Agreement, dated as of December 11, 1998, the
Fifteenth Amendment to Credit Agreement, dated as of February 23, 1999, the
Sixteenth Amendment to Credit Agreement, dated as of March 26, 1999, the
Seventeenth Amendment to Credit Agreement, dated as of September 24, 1999, and
the Eighteenth Amendment to Credit Agreement, dated as of February 11, 2000 (the
"Credit Agreement"); and

                  WHEREAS, as of the date hereof the Company, the Parent
Guarantor, the Lenders and the Agent are entering into a Nineteenth Amendment to
Credit Agreement and Limited Waiver (the "Nineteenth Amendment"); and

                  WHEREAS, the Kaiser Subsidiaries and the Agent are parties to
the Subsidiary Security Agreement, Financing Statement and Conditional
Assignment of Patents and Trademarks, dated as of February 15, 1994, as amended
by the First Amendment to Subsidiary Security Agreement, dated as of July 21,
1994, the Second Amendment to Subsidiary Security Agreement, dated as of
December 11, 1995, the Third Amendment to Subsidiary Security Agreement, dated
as of April 21, 1997, and Supplements to Subsidiary Security Agreement, dated as
of June 25, 1997 and February 23, 1999 (the "Subsidiary Security Agreement"),
and have agreed to amend the Subsidiary Security Agreement as herein provided;
and

                  WHEREAS, the Required Lenders have consented to the execution
and delivery of this Amendment by the Agent;

                  NOW, THEREFORE, the parties hereto agree as follows:

                  Section 1.        Amendment to Subsidiary Security Agreement.

                           A.       Section 2 of the Subsidiary Security
         Agreement is hereby amended by adding the following as the second
         proviso of the first paragraph thereof:

                  "; provided further that, notwithstanding anything in this
                  Agreement or in any other Loan Document to the contrary, (i)
                  with respect to any Cash Management Obligation constituting
                  Indebtedness (as defined in the Senior Indenture, the New
                  Senior Indenture or the Additional New Senior Indentures), the
                  Collateral shall not include any U.S. Fixed Assets (as defined
                  in the Senior Indenture, the New Senior Indenture or the
                  Additional New Senior Indentures) and (ii) no Proceeds of any
                  U.S. Fixed Assets, or of the disposition by the Agent of any
                  U.S. Fixed Assets, shall be applied toward the satisfaction of
                  any Cash Management Obligations constituting Indebtedness (as
                  defined in the Senior Indenture, the New Senior Indenture or
                  the Additional New Senior Indentures)."

                           B.       Clause (a)(iii) of Section 11 of the
         Subsidiary Security Agreement is hereby amended by amending the final
         sentence thereof to read in its entirety as follows:

                  "Any Proceeds of any Collateral, or of the disposition by the
                  Agent of any of the Collateral (including benefits to the
                  extent provided in Section 19 hereof), shall be applied by the
                  Agent, in the following order of priority:

                           First, to payment of the costs and expenses of such
                  disposition, including the reasonable costs and out-of-pocket
                  expenses of the Agent and attorneys' fees and costs and
                  out-of-pocket expenses of counsel (including allocated costs
                  of in-house counsel) employed in connection therewith and to
                  the payment of all advances made by the Agent for the account
                  of any Kaiser Subsidiary hereunder and the payment of all
                  reasonable costs and out-of-pocket expenses incurred by the
                  Agent in connection with the administration and enforcement of
                  this Agreement, to the extent that such advances, costs, and
                  expenses shall not have been reimbursed to the Agent;

                           Second, toward the satisfaction of the Secured
                  Obligations other than Obligations in respect of principal and
                  Reimbursement Obligations, Currency Hedge Obligations and Cash
                  Management Obligations;

                           Third, toward the satisfaction of the Secured
                  Obligations in respect of principal and Reimbursement
                  Obligations, including the deposit of available funds in an
                  amount equal to the then aggregate Letter of Credit
                  Outstandings in the L/C Collateral Account in accordance with
                  Section 5.8 of the Credit Agreement;

                           Fourth, toward the satisfaction of the Currency Hedge
                  Obligations in the order agreed to by the Currency Hedge
                  Providers from time to time;

                           Fifth, subject to the provisions of the second
                  proviso of the first paragraph of Section 2, toward the
                  satisfaction of the Cash Management Obligations in the order
                  agreed to by the Cash Management Providers from time to time;
                  and

                           Sixth, any surplus to be paid to such Kaiser
                  Subsidiary, its successors and assigns, or as a court of
                  competent jurisdiction may direct."

                  Section 2.        Kaiser Subsidiaries' Representations and
Warranties.

                  In order to induce the Agent to enter into this Amendment and
to amend the Subsidiary Security Agreement in the manner provided herein, and to
induce the Required Lenders to consent to such action by the Agent, each Kaiser
Subsidiary represents and warrants to each Lender and the Agent that, as of the
Nineteenth Amendment Effective Date (as defined in the Nineteenth Amendment)
after giving effect to the effectiveness of this Amendment, the following
statements are true and correct in all material respects:

                  A. Authorization of Agreements. The execution and delivery of
this Amendment by such Kaiser Subsidiary and the performance of the Subsidiary
Security Agreement as amended by this Amendment (the "Amended Agreement") by
such Kaiser Subsidiary are within such Kaiser Subsidiary's corporate powers or
company powers, as the case may be, and have been duly authorized by all
necessary corporate action or company action, as the case may be, on the part of
such Kaiser Subsidiary.

                  B. No Conflict. The execution and delivery by such Kaiser
Subsidiary of this Amendment and the performance by such Kaiser Subsidiary of
the Amended Agreement do not:

                           (1)      contravene such Kaiser Subsidiary's Organic
Documents or the Organizational Agreements;

                           (2)      contravene the Senior Indenture, the New
Senior Indenture, the Additional Senior Indentures or the Subordinated Indenture
or contravene any other contractual restriction where such a contravention has a
reasonable possibility of having a Materially Adverse Effect or contravene any
law or governmental regulation or court decree or order binding on or affecting
such Kaiser Subsidiary or any of its Subsidiaries; or

                           (3)      result in, or require the creation or
imposition of, any Lien on any of such Kaiser Subsidiary's properties, other
than pursuant to the Loan Documents.

                  C. Binding Obligation. This Amendment has been duly executed
and delivered by such Kaiser Subsidiary and this Amendment and the Amended
Agreement constitute the legal, valid and binding obligations of such Kaiser
Subsidiary, enforceable against such Kaiser Subsidiary in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally and by general principles of equity.

                  D. Governmental Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance of this Amendment by such Kaiser Subsidiary.

                  Section 3. Miscellaneous.

                  A. Reference to and Effect on the Subsidiary Security
Agreement and the Other Loan Documents.

                           (1) On and after the Nineteenth Amendment Effective
Date, each reference in the Subsidiary Security Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import referring to the
Subsidiary Security Agreement, and each reference in the other Loan Documents to
the "Subsidiary Security Agreement", "thereunder", "thereof" or words of like
import referring to the Subsidiary Security Agreement shall mean and be a
reference to the Amended Agreement.

                           (2) Except as specifically amended by this Amendment,
the Subsidiary Security Agreement shall remain in full force and effect and is
hereby ratified and confirmed.

                           (3) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy of the
Agent or any Lender under, the Subsidiary Security Agreement.

                  B. Applicable Law.  THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO SUCH LAWS RELATING TO
CONFLICTS OF LAWS.

                  C. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provision hereof.

                  D. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts and by the different parties on separate
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.

                  E. Severability. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Amendment
or affecting the validity or enforceability of such provisions in any other
jurisdiction.

                  IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered as of the day and year first above written.

BANK OF AMERICA, N.A. (successor to
BankAmerica Business Credit, Inc.), as Agent
By:
Name: Michael J. Jasaitis
Its: Vice President

AKRON HOLDING CORPORATION                            KAISER ALUMINUM & CHEMICAL
                                                     INVESTMENT, INC.

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER ALUMINUM PROPERTIES,                          KAISER ALUMINUM TECHNICAL
INC.                                                 SERVICES, INC.

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

OXNARD FORGE DIE COMPANY, INC.                       KAISER ALUMINIUM
                                                     INTERNATIONAL, INC.

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER ALUMINA AUSTRALIA                             KAISER FINANCE CORPORATION
CORPORATION

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER MICROMILL HOLDINGS, LLC                       KAISER SIERRA MICROMILLS, LLC

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed: David A. Cheadle
Its:  Assistant Treasurer                            Its: Assistant Treasurer

KAISER TEXAS SIERRA MICROMILLS,                      KAISER TEXAS MICROMILL
LLC                                                  HOLDINGS, LLC

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER BELLWOOD CORPORATION                          KAISER TRANSACTION CORP.

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer


                                   EXHIBIT VII

RECORDING REQUESTED BY:


                                                                                                                                                                                                EXHIBIT VII
AND WHEN RECORDED MAIL TO:

O'Melveny & Myers LLP
275 Battery Street, 26th Floor
San Francisco, California  94111-3305
Attn:    Jill H. Matichak, Esq.
         (File No. 019,368-663)



              THIRD AMENDMENT TO DEED OF TRUST WITH POWER OF SALE,
                         ASSIGNMENT OF LEASES AND RENTS,
                       SECURITY AGREEMENT, FIXTURE FILING
                             AND FINANCING STATEMENT

                  THIS THIRD AMENDMENT TO DEED OF TRUST WITH POWER OF SALE,
ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING
STATEMENT (this "THIRD AMENDMENT") is made as of December 27, 2000 by and
between KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware corporation
("TRUSTOR"), whose address is 5847 San Felipe, Suite 2600, Houston Texas 77057,
and BANK OF AMERICA, N.A. (successor to BankAmerica Business Credit, Inc., a
Delaware corporation) ("BANK OF AMERICA"), as agent for the Secured Lenders,
having an office at 55 South Lake Avenue, Suite 900, Pasadena, California 91101
(Bank of America, in its capacity as agent for the Secured Lenders, shall be
referred to hereinafter as "BENEFICIARY").

                                R E C I T A L S :

                  A. Pursuant to that certain Credit Agreement, dated as of
February 15, 1994 (the "CREDIT AGREEMENT") between Trustor, Kaiser Aluminum
Corporation, a Delaware corporation ("PARENT GUARANTOR"), Bank of America and
various other financial institutions named therein (which financial
institutions, together with Bank of America in its capacity as lender, shall be
referred to hereinafter collectively as "BANK LENDERS") and Beneficiary, Bank
Lenders agreed to make certain revolving loans and other financial commitments
to Trustor (the "LOANS"). Except as otherwise provided in this Third Amendment,
all initially capitalized terms used herein without definition shall have the
same meaning as in the Credit Agreement, as amended.

                  B. The Loans are secured by, among other things, that certain
Deed of Trust with Power of Sale, Assignment of Leases and Rents, Security
Agreement, Fixture Filing and Financing Statement dated as of February 15, 1994,
executed by Trustor, as trustor, to Chicago Title Insurance Company, as trustee,
for the benefit of Beneficiary as agent of Bank Lenders, as beneficiary, and
recorded on __________ in the Official Records of _________ County, __________
at Volume _____, Page _____ (the "ORIGINAL DEED OF TRUST"), as amended by the
First Amendment to Deed of Trust with Power of Sale, Assignment of Leases and
Rents, Security Agreement, Fixture Filing and Financing Statement (the "FIRST
AMENDMENT") dated as of July 21, 1994 and recorded on __________ in the Official
Records of _________ County, __________ as Instrument _____, Volume _____, Page
_____ and the Second Amendment to Deed of Trust with Power of Sale, Assignment
of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement
(the "SECOND AMENDMENT") dated as of March 10, 1995 and recorded on __________
in the Official Records of __________County, _________ as Instrument _____,
Volume ____, Page __ (as so amended, the "DEED OF TRUST").

                  C. The Deed of Trust encumbers that certain real property
located in __________ County, _________ as more particularly described in
Exhibit A, attached hereto, and by this reference incorporated herein.

                  D. Concurrently herewith, Trustor, Parent Guarantor and Bank
Lenders have agreed to amend the Credit Agreement to, among other things, permit
the Cash Management Providers (as defined in the Credit Agreement) to provide
Cash Management Services (as defined in the Credit Agreement) to Trustor and
provide that Trustor's obligations in respect thereof shall be secured by the
Deed of Trust, all as set forth in that certain Nineteenth Amendment to Credit
Agreement and Limited Waiver dated of even date herewith by and between Trustor,
Parent Guarantor, Lenders and Beneficiary (the "NINETEENTH CREDIT AGREEMENT
AMENDMENT").

                  E. Trustor and Beneficiary desire to amend the Deed of Trust
to reflect and evidence the amendments and modifications set forth in the
Nineteenth Credit Agreement Amendment.

                  NOW, THEREFORE, with reference to the foregoing Recitals and
for valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Trustor and Beneficiary further agree as follows:

                           1.   The definitions of "Lenders" and "Secured
                                Obligations" set forth in Exhibit C of the Deed
                                of Trust shall be amended to read in their
                                entirety as follows:

                           "'Lender' and 'Lenders' shall mean the Bank Lenders,
                  the Currency Hedge Providers (as defined in the Credit
                  Agreement) and the Cash Management Providers (as defined in
                  the Credit Agreement)."

                           "'Secured Obligations' means (A) all Obligations,
                  whether now existing or hereafter arising, of Trustor under or
                  in connection with the Credit Agreement or any other Loan
                  Documents, (B) all Obligations, whether now existing or
                  hereafter arising, of Trustor under or in connection with the
                  Currency Hedge Agreements (as defined in the Credit Agreement)
                  and (C) all Obligations, whether now existing or hereafter
                  arising, of Trustor arising in connection with the Cash
                  Management Services (as defined in the Credit Agreement),
                  whether for advances, costs, fees, expenses, or otherwise;
                  provided, however, that the Secured Obligations shall not
                  include any Cash Management Obligation (as defined in the
                  Credit Agreement) constituting Indebtedness (as defined in the
                  Senior Indenture (as defined in the Credit Agreement), the
                  Additional New Senior Indenture (as defined in the Credit
                  Agreement) or the New Senior Indentures (as defined in the
                  Credit Agreement))."

                              2.       Section 3.9 of the Deed of Trust is hereby
                           amended to read in its entirety as follows:

                           First, to payment of the costs and expenses of
                  disposing of the Collateral and realizing Proceeds, including
                  the reasonable costs and out-of-pocket expenses of Beneficiary
                  and the Lenders, and attorneys' fees and costs and
                  out-of-pocket expenses of counsel employed in connection
                  therewith and to the payment of all advances made by
                  Beneficiary and the Lenders for the account of Trustor
                  hereunder and the payment of all reasonable costs and
                  out-of-pocket expenses incurred by Beneficiary in connection
                  with the administration and enforcement, and by any Lender in
                  connection with the enforcement, of this Deed of Trust, to the
                  extent that such advances, costs, and expenses shall not have
                  been reimbursed to Beneficiary or the Lenders, as the case may
                  be;

                           Second, toward the satisfaction of the Secured
                  Obligations other than Obligations in respect of principal and
                  Reimbursement Obligations, Currency Hedge Obligations and Cash
                  Management Obligations;

                           Third, toward the satisfaction of the Secured
                  Obligations in respect of principal and Reimbursement
                  Obligations, including the deposit of available funds in an
                  amount equal to the then aggregate Letter of Credit
                  Outstandings in the L/C Collateral Account in accordance with
                  Section 5.8 of the Credit Agreement;

                           Fourth, toward the satisfaction of the Currency Hedge
                  Obligations in the order agreed to by the Currency Hedge
                  Providers from time to time;

                           Fifth, toward the satisfaction of the Cash Management
                  Obligations that constitute Secured Obligations in the order
                  agreed to by the Cash Management Providers from time to time;
                  and

                           Sixth, any surplus to be paid to the Trustor, its
                  successors and assigns, or as a court of competent
                  jurisdiction may direct.

                                3. Trustor's obligations
                            evidenced by the Credit Agreement, as
                            amended by the Nineteenth Credit Agreement
                            Amendment, shall continue to be secured by
                            the Deed of Trust. Except as amended by this
                            Third Amendment, the Deed of Trust shall
                            remain unmodified and in full force and
                            effect. The parties hereto hereby ratify and
                            confirm the Deed of Trust as amended hereby.

                                4.  It is the intent of
                            each of the parties hereto that the Deed of
                            Trust, as modified and amended by the First
                            Amendment, the Second Amendment and this
                            Third Amendment, shall have and retain the
                            priority established at the time of its
                            original recordation on February 18, 1994
                            (the "ORIGINAL RECORDING DATE"). To the
                            extent that any court of law or equity
                            determines that the priority of this Third
                            Amendment may not relate back to the
                            Original Recording Date, then (i) this Third
                            Amendment shall be bifurcated from the Deed
                            of Trust such that the obligations of
                            Trustor with respect to the Cash Management
                            Services, secured by this Third Amendment,
                            shall have such priority as is established
                            at the time of recordation of this Third
                            Amendment in the Official Records of
                            __________ County, ______, and (ii) the Deed
                            of Trust, as unamended by this Third
                            Amendment, shall continue to secure the
                            obligations of Trustor under the Credit
                            Agreement, as unamended by the Nineteenth
                            Credit Agreement Amendment, and the other
                            Secured Obligations set forth in the Deed of
                            Trust, and shall continue to have the
                            priority described in paragraph 2 of the
                            Second Amendment. In no event shall this
                            Third Amendment destroy, impair or otherwise
                            affect the priority of the Deed of Trust
                            established on the Original Recording Date.

                                5.        This Third Amendment
                            shall be governed by and construed in
                            accordance with the laws in the State of
                            ______ without giving effect to the conflict
                            of law principles of said State.

                                6.        This Third Amendment
                            may be executed in counterparts, each of
                            which shall be deemed an original, but all
                            of which when taken together shall
                            constitute one and the same instrument. The
                            signature page of any counterpart may be
                            detached therefrom without impairing the
                            legal effect of the signature(s) thereon and
                            attached to any other counterpart identical
                            thereto except having additional signature
                            pages attached to it.

                                7.        In the event of any
                            inconsistencies between the provisions of
                            this Third Amendment and the provisions of
                            the Deed of Trust, the provisions of this
                            Third Amendment shall govern and prevail.

                                8.        The relationship of
                            Trustor and Beneficiary with respect to the
                            Loans and the matters set forth herein is
                            that of creditor and debtor respectively and
                            by virtue of entering into the Third Credit
                            Agreement Amendment and performing their
                            respective obligations thereunder, Trustor
                            and Beneficiary do not intend to form a
                            partnership or joint venture or any other
                            relationship other than that of creditor and
                            debtor respectively.

                  IN WITNESS WHEREOF, the duly authorized representatives of
Trustor and Beneficiary have executed this Third Amendment as of the date first
above written.

                                    "TRUSTOR"
                                    KAISER ALUMINUM & CHEMICAL
                                    CORPORATION, a Delaware corporation

                                    By:
                                    Name: David A. Cheadle
                                    Its:  Assistant Treasurer



                                     "BENEFICIARY"
                                     BANK OF AMERICA, N.A. (successor to BankAmerica
                                     Business Credit, Inc., a Delaware corporation)

                                     By:
                                     Name: Michael J. Jasaitis
                                     Its:  Vice President


                                ACKNOWLEDGEMENTS

STATE OF ___________________                )
                                            )
COUNTY OF __________________                )


                  On December __, 2000, before me, _____________________, a
Notary Public in and for said State, personally appeared
______________________________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

                  WITNESS my hand and official seal.
Signature         ________________________________ (Seal)




STATE OF ___________________                )
                                            )
COUNTY OF __________________                )



                  On December __, 2000, before me, _____________________, a
Notary Public in and for said State, personally appeared
______________________________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

                  WITNESS my hand and official seal.
                                  Signature________________________________ (Seal)



                                                                                                                                                                                                Signature________________________________ (Seal)

                                  EXHIBIT VIII

RECORDING REQUESTED BY:


                                                                                                                                                                                                EXHIBIT VIII
O'Melveny & Myers LLP
275 Battery Street, 26th Floor
San Francisco, California  94111-3305
Attn:    Jill H. Matichak, Esq.
         (File No. 019,368-663)

                 THIRD AMENDMENT TO MORTGAGE WITH POWER OF SALE,
                         ASSIGNMENT OF LEASES AND RENTS,
                       SECURITY AGREEMENT, FIXTURE FILING
                             AND FINANCING STATEMENT

                  THIS THIRD AMENDMENT TO MORTGAGE WITH POWER OF SALE,
ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING
STATEMENT (this "THIRD AMENDMENT") is made as of December 27, 2000 by and
between KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware corporation
("MORTGAGOR"), whose address is 5847 San Felipe, Suite 2600, Houston Texas
77057, and BANK OF AMERICA, N.A. (successor to BankAmerica Business Credit,
Inc., a Delaware corporation) ("BANK OF AMERICA"), as agent for the Secured
Lenders, having an office at 55 South Lake Avenue, Suite 900, Pasadena,
California 91101 (Bank of America, in its capacity as agent for the Secured
Lenders, shall be referred to hereinafter as "MORTGAGEE").

                                R E C I T A L S :

                  A. Pursuant to that certain Credit Agreement dated as of
February 15, 1994 (the "CREDIT AGREEMENT") between Mortgagor, Kaiser Aluminum
Corporation, a Delaware corporation ("PARENT GUARANTOR"), Bank of America and
various other financial institutions named therein (which financial
institutions, together with Bank of America in its capacity as lender, shall be
referred to hereinafter collectively as "BANK LENDERS") and Mortgagee, Bank
Lenders agreed to make certain revolving loans and other financial commitments
to Mortgagor (the "LOANS"). Except as otherwise provided in this Third
Amendment, all initially capitalized terms used herein without definition shall
have the same meaning as in the Credit Agreement, as amended.

                  B. The Loans are secured by, among other things, that certain
Mortgage with Power of Sale, Assignment of Leases and Rents, Security Agreement,
Fixture Filing and Financing Statement dated as of February 15, 1994, executed
by Mortgagor, as mortgagor, to Mortgagee as agent of Bank Lenders, as mortgagee,
and recorded on __________ in the Official Records of __________ County,
__________ at Volume _____, Page _____ (the "ORIGINAL MORTGAGE"), as amended by
the First Amendment to Mortgage with Power of Sale, Assignment of Leases and
Rents, Security Agreement, Fixture Filing and Financing Statement (the "FIRST
AMENDMENT") dated as of July 21, 1994 and recorded on __________ in the Official
Records of _________ County, __________ as Instrument __________, Volume _____,
Page _____ and the Second Amendment to Mortgage with Power of Sale, Assignment
of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement
(the "SECOND AMENDMENT") dated as of March 10, 1995 and recorded on __________
in the Official Records of __________ County, __________ as Instrument _____,
Volume ____, Page __ (as so amended, the "MORTGAGE").

                  C. The Mortgage encumbers that certain real property located
in __________ County, __________ as more particularly described in Exhibit A,
attached hereto, and by this reference incorporated herein.

                  D. Concurrently herewith, Mortgagor, Parent Guarantor and Bank
Lenders have agreed to amend the Credit Agreement to, among other things, permit
the Cash Management Providers (as defined in the Credit Agreement) to provide
Cash Management Services (as defined in the Credit Agreement) to Mortgagor and
provide that Mortgagor's obligations in respect thereof shall be secured by the
Mortgage, all as set forth in that certain Nineteenth Amendment to Credit
Agreement dated of even date herewith by and between Mortgagor, Parent
Guarantor, Lenders and Mortgagee (the "NINETEENTH CREDIT AGREEMENT AMENDMENT").


                  E. Mortgagor and Mortgagee desire to amend the Mortgage to
reflect and evidence the amendments and modifications set forth in the
Nineteenth Credit Agreement Amendment.

                  NOW, THEREFORE, with reference to the foregoing Recitals and
for valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Mortgagor and Mortgagee further agree as follows:

                   1.    The definitions of "Lenders" and "Secured Obligations" set
forth in Exhibit C of the Mortgage shall be amended to read in their
entirety as follows:

                      "'Lender' and 'Lenders' shall mean the Bank Lenders, the
                   Currency Hedge Providers (as defined in the Credit Agreement)
                   and the Cash Management Providers (as defined in the Credit
                   Agreement)."

                      "'Secured Obligations' means (A) all Obligations, whether
                   now existing or hereafter arising, of Mortgagor under or in
                   connection with the Credit Agreement or any other Loan
                   Documents, (B) all Obligations, whether now existing or
                   hereafter arising, of Mortgagor under or in connection with
                   the Currency Hedge Agreements (as defined in the Credit
                   Agreement) and (C) all Obligations, whether now existing or
                   hereafter arising, of Mortgagor arising in connection with
                   the Cash Management Services (as defined in the Credit
                   Agreement), whether for advances, costs, fees, expenses, or
                   otherwise; provided, however, that the Secured Obligations
                   shall not include any Cash Management Obligation (as defined
                   in the Credit Agreement) constituting Indebtedness (as
                   defined in the Senior Indenture (as defined in the Credit
                   Agreement), the Additional New Senior Indenture (as defined
                   in the Credit Agreement) or the New Senior Indentures (as
                   defined in the Credit Agreement))."

                  2. Section 3.9 of the Mortgage is hereby amended to read in
its entirety as follows:

                     First, to payment of the costs and expenses of
                  disposing of the Collateral and realizing Proceeds, including
                  the reasonable costs and out-of-pocket expenses of Mortgagee
                  and the Lenders, and attorneys' fees and costs and
                  out-of-pocket expenses of counsel employed in connection
                  therewith and to the payment of all advances made by Mortgagee
                  and the Lenders for the account of Mortgagor hereunder and the
                  payment of all reasonable costs and out-of-pocket expenses
                  incurred by Mortgagee in connection with the administration
                  and enforcement, and by any Lender in connection with the
                  enforcement, of this Mortgage, to the extent that such
                  advances, costs, and expenses shall not have been reimbursed
                  to Mortgagee or the Lenders, as the case may be;

                     Second, toward the satisfaction of the Secured Obligations
                  other than Obligations in respect of principal and
                  Reimbursement Obligations, Currency Hedge Obligations and Cash
                  Management Obligations;

                     Third, toward the satisfaction of the Secured Obligations
                  in respect of principal and Reimbursement Obligations,
                  including the deposit of available funds in an amount equal to
                  the then aggregate Letter of Credit Outstandings in the L/C
                  Collateral Account in accordance with Section 5.8 of the
                  Credit Agreement;

                     Fourth, toward the satisfaction of the Currency Hedge
                  Obligations in the order agreed to by the Currency Hedge
                  Providers from time to time;

                     Fifth, toward the satisfaction of the Cash Management
                  Obligations that constitute Secured Obligations in the order
                  agreed to by the Cash Management Providers from time to time;
                  and

                     Sixth, any surplus to be paid to the Mortgagor, its
                  successors and assigns, or as a court of competent
                  jurisdiction may direct.

                3. Mortgagor's obligations evidenced by the Credit Agreement, as
amended by the Nineteenth Credit Agreement Amendment, shall continue to be
secured by the Mortgage. Except as amended by this Third Amendment, the Mortgage
shall remain unmodified and in full force and effect. The parties hereto hereby
ratify and confirm the Mortgage as amended hereby.

                4. It is the intent of each of the parties hereto that the
Mortgage, as modified and amended by the First Amendment, the Second Amendment
and this Third Amendment, shall have and retain the priority established at the
time of its original recordation on February 18, 1994 (the "ORIGINAL RECORDING
DATE"). To the extent that any court of law or equity determines that the
priority of this Third Amendment may not relate back to the Original Recording
Date, then (i) this Third Amendment shall be bifurcated from the Mortgage such
that the obligations of Mortgagor with respect to the Cash Management Services,
secured by this Third Amendment, shall have such priority as is established at
the time of recordation of this Third Amendment in the Official Records of _____
County, ___, and (ii) the Mortgage, as unamended by this Third Amendment, shall
continue to secure the obligations of Mortgagor under the Credit Agreement, as
unamended by the Nineteenth Credit Agreement Amendment, and the other Secured
Obligations set forth in the Mortgage, and shall continue to have the priority
described in paragraph 2 of the Second Amendment. In no event shall this Third
Amendment destroy, impair or otherwise affect the priority of the Mortgage
established on the Original Recording Date.

                 5. This Third Amendment shall be governed by and construed in
accordance with the laws in the State of ___ without giving effect to the
conflict of law principles of said State.

                 6. This Third Amendment may be executed in counterparts, each
of which shall be deemed an original, but all of which when taken together shall
constitute one and the same instrument. The signature page of any counterpart
may be detached therefrom without impairing the legal effect of the signature(s)
thereon and attached to any other counterpart identical thereto except having
additional signature pages attached to it.

                 7. In the event of any inconsistencies between the provisions
of this Third Amendment and the provisions of the Mortgage, the provisions of
this Third Amendment shall govern and prevail.

                 8. The relationship of Mortgagor and Mortgagee with respect to
the Loans and the matters set forth herein is that of creditor and debtor
respectively and by virtue of entering into the Third Credit Agreement Amendment
and performing their respective obligations thereunder, Mortgagor and Mortgagee
do not intend to form a partnership or joint venture or any other relationship
other than that of creditor and debtor respectively.

                 IN WITNESS WHEREOF, the duly authorized representatives of
Mortgagor and Mortgagee have executed this Third Amendment as of the date first
above written.

                                            "MORTGAGOR"
                                            KAISER ALUMINUM & CHEMICAL
                                            CORPORATION, a Delaware corporation
                                            By:
                                            Name: David A. Cheadle
                                            Its:  Assistant Treasurer



                                            "MORTGAGEE"
                                            BANK OF AMERICA, N.A. (successor to BankAmerica
                                            Business Credit, Inc., a Delaware corporation)
                                            By:
                                            Name: Michael J. Jasaitis
                                            Its:  Vice President


                                ACKNOWLEDGEMENTS

STATE OF ___________________                )
                                            )
COUNTY OF __________________                )


                  On December __, 2000, before me, _____________________, a
Notary Public in and for said State, personally appeared
______________________________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

                  WITNESS my hand and official seal.
Signature         ________________________________ (Seal)




STATE OF ___________________                )
                                            )
COUNTY OF __________________                )



                  On December __, 2000, before me, _____________________, a
Notary Public in and for said State, personally appeared
______________________________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

                  WITNESS my hand and official seal.
Signature         ________________________________ (Seal)


                                    EXHIBIT A
                          LEGAL DESCRIPTION OF PROPERTY



                                   EXHIBIT IX

             SECOND AMENDMENT TO INTERCOMPANY NOTE PLEDGE AGREEMENT


                  THIS SECOND AMENDMENT TO INTERCOMPANY NOTE PLEDGE AGREEMENT
(this "Amendment"), dated as of December 27, 2000, is by and among Kaiser Export
Company, a California corporation, and Kaiser Bauxite Company, a Nevada
corporation, (collectively, the "Pledgors" and, individually, a "Pledgor"), and
Bank of America, N.A. (successor to BankAmerica Business Credit, Inc., a
Delaware corporation), as agent for the Secured Lenders (in such capacity,
together with its successors and assigns in such capacity, the "Agent").
Capitalized terms used, but not defined, herein shall have the meanings given to
such terms in the Credit Agreement, as amended by the Nineteenth Amendment.

                              W I T N E S S E T H:

                  WHEREAS, Kaiser Aluminum & Chemical Corporation (the
"Company"), Kaiser Aluminum Corporation, the various financial institutions that
are or may from time to time become parties to the Credit Agreement
(collectively, the "Lenders" and, individually, a "Lender"), and the Agent are
parties to the Credit Agreement, dated as of February 15, 1994, as amended by
the First Amendment to Credit Agreement, dated as of July 21, 1994, the Second
Amendment to Credit Agreement, dated as of March 10, 1995, the Third Amendment
to Credit Agreement and Acknowledgment, dated as of July 20, 1995, the Fourth
Amendment to Credit Agreement, dated as of October 17, 1995, the Fifth Amendment
to Credit Agreement, dated as of December 11, 1995, the Sixth Amendment to
Credit Agreement, dated as of October 1, 1996, the Seventh Amendment to Credit
Agreement, dated as of December 17, 1996, the Eighth Amendment to Credit
Agreement, dated as of February 24, 1997, the Ninth Amendment to Credit
Agreement and Acknowledgment, dated as of April 21, 1997, the Tenth Amendment to
Credit Agreement and Assignment, dated as of June 25, 1997, the Eleventh
Amendment to Credit Agreement and Limited Waivers, dated as of October 20, 1997,
the Twelfth Amendment to Credit Agreement, dated as of January 13, 1998, the
Thirteenth Amendment to Credit Agreement, dated as of July 20, 1998, the
Fourteenth Amendment to Credit Agreement, dated as of December 11, 1998, the
Fifteenth Amendment to Credit Agreement, dated as of February 23, 1999, the
Sixteenth Amendment to Credit Agreement, dated as of March 26, 1999, the
Seventeenth Amendment to Credit Agreement, dated as of September 24, 1999, and
the Eighteenth Amendment to Credit Agreement, dated as of February 11, 2000 (the
"Credit Agreement"); and

                  WHEREAS, as of the date hereof the Company, the Parent
Guarantor, the Lenders and the Agent are entering into a Nineteenth Amendment to
Credit Agreement and Limited Waiver (the "Nineteenth Amendment"); and

                  WHEREAS, the Pledgors and the Agent are parties to the
Intercompany Note Pledge Agreement, dated as of February 15, 1994, as amended by
the First Amendment to Intercompany Note Pledge Agreement, dated as of July 21,
1994 (the "Intercompany Note Pledge Agreement"), and have agreed to amend the
Intercompany Note Pledge Agreement as herein provided; and

                  WHEREAS, the Required Lenders have consented to the execution
and delivery of this Amendment by the Agent;

                  NOW, THEREFORE, the parties hereto agree as follows:

                  Section 1.  Amendment to Intercompany Note Pledge Agreement.

                  Section 2.3 of the Intercompany Note Pledge Agreement is
amended to read in its entirety as follows:

                  "SECTION 2.3. Secured Obligations. This Agreement secures, and
                  the Collateral is collateral security for, the prompt payment
                  or performance in full when due, whether at stated maturity,
                  by required prepayment, declaration, acceleration, demand, or
                  otherwise (including the payment of amounts that would become
                  due but for the operation of the automatic stay under Section
                  362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)) of, all
                  Obligations of the Parent Guarantor, the Company, and their
                  respective Subsidiaries, whether now existing or hereafter
                  arising under or in connection with the Credit Agreement or
                  any other Loan Document, all Obligations of the Company now
                  existing or hereafter arising under or in connection with the
                  Currency Hedge Agreements, all Obligations of the Company now
                  existing or hereafter arising in connection with the Cash
                  Management Services, and any and all extensions or renewals,
                  thereof, whether for principal, interest (including interest
                  that, but for the filing of a petition in bankruptcy with
                  respect to the Parent Guarantor, the Company or any of their
                  respective Subsidiaries, would accrue on such Obligations),
                  reimbursements of amounts drawn under Letters of Credit, fees,
                  expenses, indemnities, or otherwise, whether voluntary or
                  involuntary, direct or indirect, absolute or contingent,
                  liquidated or unliquidated, whether or not jointly owed with
                  others, whether or not from time to time decreased or
                  extinguished and later increased, created, or incurred, and
                  all or any portion of such Obligations that are paid, to the
                  extent all or any part of such payment is avoided or recovered
                  directly or indirectly from the Agent or any Secured Lender as
                  a preference, fraudulent transfer, or otherwise, and any and
                  all Obligations of any Pledgor now or hereafter existing under
                  this Agreement, whether for advances, costs, fees, expenses,
                  or otherwise (collectively, the 'Secured Obligations')."

                  Section 2. Pledgors' Representations and Warranties.

                  In order to induce the Agent to enter into this Amendment and
to amend the Intercompany Note Pledge Agreement in the manner provided herein,
and to induce the Required Lenders to consent to such action by the Agent, each
Pledgor represents and warrants to each Lender and the Agent that, as of the
Nineteenth Amendment Effective Date (as defined in the Nineteenth Amendment)
after giving effect to the effectiveness of this Amendment, the following
statements are true and correct in all material respects:

                  A.       Authorization of Agreements.  The execution and
delivery of this Amendment by such Pledgor and the performance of the
Intercompany Note Pledge Agreement as amended by this Amendment (the "Amended
Agreement") by such Pledgor are within such Pledgor's corporate powers and have
been duly authorized by all necessary corporate action on the part of such Pledgor.

                  B.       No Conflict.  The execution and delivery by such
Pledgor of this Amendment and the performance by such Pledgor of the Amended
Agreement do not:

                           (1)      contravene such Pledgor's Organic Documents;

                           (2)      contravene the Senior Indenture, the New
Senior Indenture, the Additional New Senior Indentures or the Subordinated
Indenture or contravene any other contractual restriction where such a
contravention has a reasonable possibility of having a Materially Adverse Effect
or contravene any law or governmental regulation or court decree or order
binding on or affecting such Pledgor or any of its Subsidiaries; or

                           (3)      result in, or require the creation or
imposition of, any Lien on any of such Pledgor's properties, other than pursuant
to the Loan Documents.

                  C. Binding Obligation. This Amendment has been duly executed
and delivered by such Pledgor and this Amendment and the Amended Agreement
constitute the legal, valid and binding obligations of such Pledgor, enforceable
against such Pledgor in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally and by general principles of
equity.

                  D. Governmental Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance of this Amendment by such Pledgor.

                  Section 3.  Miscellaneous.

                  A. Reference to and Effect on the Intercompany Note Pledge Agreement and
the Other Loan Documents.

                           (1) On and after the Nineteenth Amendment Effective
Date, each reference in the Intercompany Note Pledge Agreement to "this
Agreement", "hereunder", "hereof", "herein" or words of like import referring to
the Intercompany Note Pledge Agreement, and each reference in the other Loan
Documents to the "Intercompany Note Pledge Agreement", "thereunder", "thereof"
or words of like import referring to the Intercompany Note Pledge Agreement
shall mean and be a reference to the Amended Agreement.

                           (2) Except as specifically amended by this Amendment,
the Intercompany Note Pledge Agreement shall remain in full force and effect and
is hereby ratified and confirmed.

                           (3) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy of the
Agent or any Lender under, the Intercompany Note Pledge Agreement.

                  B. Applicable Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO SUCH LAWS RELATING TO CONFLICTS OF LAWS.

                  C. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provision hereof.

                  D. Counterparts. This Amendment may be executed by the parties
hereto in several counterparts and by the different parties on separate
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.

                  E. Severability. Any provision of this Amendment which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Amendment
or affecting the validity or enforceability of such provisions in any other
jurisdiction.

                  IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered as of the day and year first above written.


KAISER BAUXITE COMPANY                               KAISER EXPORT COMPANY

By:                                                  By:
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

BANK OF AMERICA, N.A. (successor to
BankAmerica Business Credit, Inc.), as Agent


By:
Name Printed:
Its:

EX-4.36

                                                     E X E C U T I O N   C O P Y


                     TWENTIETH AMENDMENT TO CREDIT AGREEMENT

                  THIS TWENTIETH AMENDMENT TO CREDIT AGREEMENT (this
"Amendment"), dated as of January 26, 2001 is by and between KAISER ALUMINUM &
CHEMICAL CORPORATION, a Delaware corporation (the "Company"), KAISER ALUMINUM
CORPORATION, a Delaware corporation (the "Parent Guarantor"), the various
financial institutions that are or may from time to time become parties to the
Credit Agreement referred to below (collectively, the "Lenders" and,
individually, a "Lender"), and Bank of America, N.A. (successor to BankAmerica
Business Credit, Inc., a Delaware corporation), as agent (in such capacity,
together with its successors and assigns in such capacity, the "Agent") for the
Lenders. Capitalized terms used, but not defined, herein shall have the meanings
given to such terms in the Credit Agreement, as amended hereby.

                              W I T N E S S E T H:

                  WHEREAS, the Company, the Parent Guarantor, the Lenders and
the Agent are parties to the Credit Agreement, dated as of February 15, 1994, as
amended by the First Amendment to Credit Agreement, dated as of July 21, 1994,
the Second Amendment to Credit Agreement, dated as of March 10, 1995, the Third
Amendment to Credit Agreement and Acknowledgement, dated as of July 20, 1995,
the Fourth Amendment to Credit Agreement, dated as of October 17, 1995, the
Fifth Amendment to Credit Agreement, dated as of December 11, 1995, the Sixth
Amendment to Credit Agreement, dated as of October 1, 1996, the Seventh
Amendment to Credit Agreement, dated as of December 17, 1996, the Eighth
Amendment to Credit Agreement, dated as of February 24, 1997, the Ninth
Amendment to Credit Agreement and Acknowledgment, dated as of April 21, 1997,
the Tenth Amendment to Credit Agreement and Assignment, dated as of June 25,
1997, the Eleventh Amendment to Credit Agreement and Limited Waivers, dated as
of October 20, 1997, the Twelfth Amendment to Credit Agreement, dated as of
January 13, 1998, the Thirteenth Amendment to Credit Agreement, dated as of July
20, 1998, the Fourteenth Amendment to Credit Agreement, dated as of December 11,
1998, the Fifteenth Amendment to Credit Agreement, dated as of February 23,
1999, the Sixteenth Amendment to Credit Agreement, dated as of March 26, 1999,
the Seventeenth Amendment to Credit Agreement, dated as of September 24, 1999,
the Eighteenth Amendment to Credit Agreement, dated as of February 11, 2000, and
the Nineteenth Amendment to Credit Agreement and Limited Waiver, dated as of
December 27, 2000 (the "Credit Agreement"); and

                  WHEREAS, the parties hereto have agreed to amend the Credit
Agreement as herein provided;

                  NOW, THEREFORE, the parties hereto agree as follows:

Section 1.   Amendments to Credit Agreement.

1.1      Amendments to Article IX: Covenants

                           A. Section 9.2.5 of the Credit Agreement is hereby
         amended by (i) deleting the word "and" at the end of clause (u)
         thereof, (ii) deleting the period at the end of clause (v) thereof and
         substituting "; and" therefor, and (iii) adding the following as new
         clause (w) thereof:

                  "(w) Investments by a Subsidiary of the Company in the Company
         as a result of any purchase by such Subsidiary of Senior Notes
         permitted under Section 9.2.6(b)(iv)."

                           B. Section 9.2.6(b)(iv) of the Credit Agreement is
         hereby amended to read in its entirety as follows:

                           "(iv) redeem, purchase, or defease any Subordinated
                  Debt, any New Subordinated Debt, any Senior Debt, any New
                  Senior Debt, any Additional New Senior Debt, the PIK Note or
                  any Equity Proceeds Note; provided, however, that,
                  notwithstanding the provisions of Section 9.2.6(b)(ii), the
                  Company and its Subsidiaries may, at the Company's discretion,
                  purchase, redeem or defease Senior Notes from time to time
                  during the period from January 26, 2001 through December 31,
                  2001; provided that (A) the Company and its Subsidiaries may
                  not purchase, redeem or defease any Senior Note for a price
                  greater than its principal amount plus the accrued interest
                  thereon to the date of purchase, redemption or defeasance; (B)
                  the aggregate amount paid by the Company and its Subsidiaries
                  during such period as the price for all such purchases,
                  redemptions and defeasances of Senior Notes may not exceed
                  $50,000,000 (exclusive of accrued interest payable on the
                  aggregate principal amount of any such Senior Notes purchased,
                  redeemed or defeased); (C) Senior Notes that are acquired by
                  the Company or its Subsidiaries may, at the Company's
                  election, either be retired and cancelled, or pledged to the
                  Agent as part of the Collateral; (D) the Company and its
                  Subsidiaries may not transfer Senior Notes purchased, redeemed
                  or defeased pursuant to this Section 9.2.6(b)(iv), except that
                  the Company's Subsidiaries may transfer Senior Notes to the
                  Company, and the Company and its Subsidiaries may pledge
                  Senior Notes to the Agent as part of the Collateral; and (E)
                  within five Business Days after the end of any month in which
                  Senior Notes are purchased, redeemed or defeased pursuant to
                  this proviso, the Company shall pay to the Agent for the pro
                  rata account of the Lenders a fee in the amount of 0.50%
                  multiplied by the aggregate amount (exclusive of accrued
                  interest) paid by the Company and its Subsidiaries as the
                  price for the purchase, redemption or defeasance of Senior
                  Notes during such month pursuant to this proviso."

                  C. Section 9.2.13(d) of the Credit Agreement is hereby amended
         by adding the following at the end thereof:

                           "other than any such offer made in connection with a
                  purchase (or proposed purchase), redemption or defeasance of
                  Senior Notes permitted pursuant to Section 9.2.6(b)(iv)"

1.2     Amendments to Article X:  Events of Default

                  Section 10.1.11 of the Credit Agreement is hereby amended by
adding the following at the end thereof:

                           "other than any such offer, redemption, repurchase or
                  defeasance made in connection with a purchase (or proposed
                  purchase), redemption or defeasance of Senior Notes permitted
                  pursuant to Section 9.2.6(b)(iv)"

Section 2. Conditions to Effectiveness

                  This Amendment shall become effective as of the date hereof
only when the following conditions shall have been satisfied and notice thereof
shall have been given by the Agent to the Parent Guarantor, the Company and each
Lender (the date of satisfaction of such conditions and the giving of such
notice being referred to herein as the "Twentieth Amendment Effective Date"):

         A. The Agent shall have received for each Lender counterparts hereof
duly executed on behalf of the Parent Guarantor, the Company, the Agent and the
Required Lenders (or notice of the approval of this Amendment by the Required
Lenders satisfactory to the Agent shall have been received by the Agent).

         B.   The Agent shall have received:

                  (1) Resolutions of the Board of Directors or of the Executive
         Committee of the Board of Directors of the Company and the Parent
         Guarantor approving and authorizing the execution, delivery and
         performance of this Amendment, certified by their respective corporate
         secretaries or assistant secretaries as being in full force and effect
         without modification or amendment as of the date of execution hereof by
         the Company or the Parent Guarantor, as the case may be;

                  (2) A signature and incumbency certificate of the
         officers of the Company and the Parent Guarantor executing this
         Amendment;

                  (3) For each Lender, an opinion, addressed to the Agent and
         each Lender, from Kramer Levin Naftalis & Frankel LLP, in form and
         substance satisfactory to the Agent; and

                  (4) Such other information, approvals, opinions, documents or
instruments as the Agent may reasonably request.

Section 3.    Company's Representations and Warranties.

                  In order to induce the Lenders and the Agent to enter into
this Amendment and to amend the Credit Agreement in the manner provided herein,
the Parent Guarantor and the Company represent and warrant to each Lender and
the Agent that, as of the Twentieth Amendment Effective Date, after giving
effect to the effectiveness of this Amendment, the following statements are true
and correct in all material respects:

         A. Authorization of Agreements. The execution and delivery of this
Amendment by the Company and the Parent Guarantor and the performance of the
Credit Agreement as amended by this Amendment (the "Amended Agreement") by the
Company and the Parent Guarantor are within such Obligor's corporate powers and
have been duly authorized by all necessary corporate action on the part of the
Company and the Parent Guarantor, as the case may be.

         B. No Conflict.  The execution and delivery by the Company and the
Parent Guarantor of this Amendment and the performance by the Company and the
Parent Guarantor of the Amended Agreement do not:

                  (1) contravene such Obligor's Organic Documents;

                  (2) contravene the Senior Indenture, the New Senior Indenture,
         the Additional New Senior Indenture, or the Subordinated Indenture or
         contravene any other contractual restriction where such a contravention
         has a reasonable possibility of having a Materially Adverse Effect or
         contravene any law or governmental regulation or court decree or order
         binding on or affecting such Obligor or any of its Subsidiaries; or

                  (3) result in, or require the creation or imposition of, any
         Lien on any of such Obligor's properties or any of the properties of
         any Subsidiary of such Obligor, other than pursuant to the Loan
         Documents.

         C. Binding Obligation. This Amendment has been duly executed and
delivered by the Company and the Parent Guarantor and this Amendment and the
Amended Agreement constitute the legal, valid and binding obligations of the
Company and the Parent Guarantor, enforceable against the Company and the Parent
Guarantor in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally and by general principles of equity.

         D. Governmental Approval, Regulation, etc.  No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or any other Person is required for the due
execution, delivery or performance of this Amendment by the Company or the
Parent Guarantor.

         E.   Incorporation of Representations and Warranties from Credit
Agreement.  Each of the statements set forth in Section 7.2.1 of the Credit
Agreement is true and correct.

Section 4.   Acknowledgement and Consent.

                  The Company is a party to the Company Collateral Documents, in
each case as amended through the date hereof, pursuant to which the Company has
created Liens in favor of the Agent on certain Collateral to secure the
Obligations. The Parent Guarantor is a party to the Parent Collateral Documents,
in each case as amended through the date hereof, pursuant to which the Parent
Guarantor has created Liens in favor of the Agent on certain Collateral and
pledged certain Collateral to the Agent to secure the Obligations of the Parent
Guarantor. Certain Subsidiaries of the Company are parties to the Subsidiary
Guaranty and/or one or more of the Subsidiary Collateral Documents, in each case
as amended through the date hereof, pursuant to which such Subsidiaries have (i)
guarantied the Obligations and/or (ii) created Liens in favor of the Agent on
certain Collateral. The Company, the Parent Guarantor and such Subsidiaries are
collectively referred to herein as the "Credit Support Parties", and the
Company Collateral Documents, the Parent Collateral Documents, the Subsidiary
Guaranty and the Subsidiary Collateral Documents are collectively
referred to herein as the "Credit Support Documents".

                  Each Credit Support Party hereby acknowledges that it has
reviewed the terms and provisions of the Credit Agreement as amended by this
Amendment and consents to the amendment of the Credit Agreement effected as of
the date hereof pursuant to this Amendment.

                  Each Credit Support Party acknowledges and agrees that any of
the Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect. Each Credit Support Party hereby confirms
that each Credit Support Document to which it is a party or otherwise bound and
all Collateral encumbered thereby will continue to guaranty or secure, as the
case may be, the payment and performance of all obligations guaranteed or
secured thereby, as the case may be.

                  Each Credit Support Party (other than the Company and the
Parent Guarantor) acknowledges and agrees that (i) notwithstanding the
conditions to effectiveness set forth in this Amendment, such Credit Support
Party is not required by the terms of the Credit Agreement or any other Loan
Document to consent to the amendments to the Credit Agreement effected pursuant
to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or
any other Loan Document shall be deemed to require the consent of such Credit
Support Party to any future amendments to the Credit Agreement.


Section 5.   Miscellaneous.

         A.   Reference to and Effect on the Credit Agreement and the Other
Loan Documents.

                  (1)      On and after the Twentieth Amendment Effective Date,
         each reference in the Credit Agreement to "this Agreement",
         "hereunder," "hereof," "herein" or words of like import referring to
         the Credit Agreement, and each reference in the other Loan Documents to
         the "Credit Agreement," "thereunder," "thereof" or words of like import
         referring to the Credit Agreement shall mean and be a reference to the
         Amended Agreement.

                  (2) Except as specifically amended by this Amendment, the
         Credit Agreement and the other Loan Documents shall remain in full
         force and effect and are hereby ratified and confirmed.

         B.   Applicable Law.  THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO SUCH LAWS RELATING TO
CONFLICTS OF LAWS.

         C.   Headings.  The various headings of this Amendment are inserted for
convenience and shall not affect the meaning or interpretation of this Amendment
or any provision hereof.

         D.   Counterparts.  This Amendment may be executed by the parties
hereto in several counterparts and by the different parties on separate
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.

         E.   Severability.  Any provision of this Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Amendment
or affecting the validity or enforceability of such provisions in any other
jurisdiction.

                  IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered as of the day and year first above written.

KAISER ALUMINUM CORPORATION                          KAISER ALUMINUM & CHEMICAL
                                                     CORPORATION
By:  /S/ David A. Cheadle                            By:   /S/ David A. Cheadle
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

BANK OF AMERICA, N.A. (successor to                  BANK OF AMERICA, N.A. (successor to
BankAmerica Business Credit, Inc.), as Agent         BankAmerica Business Credit, Inc.)


By:  /S/ Michael J. Jasaitis                         By:  /S/ Michael J. Jasaitis
Name: Michael J. Jasaitis                            Name: Michael J. Jasaitis
Its: Vice President                                  Its: Vice President

THE CIT GROUP/BUSINESS                               HELLER FINANCIAL, INC.
CREDIT, INC.

By:  /S/ Grant Weiss                                 By:  /S/ Richard J. Holston
Name Printed:  Grant Weiss                           Name Printed:  Richard J. Holston
Its:  AVP                                            Its:  Assistant Vice President

CONGRESS FINANCIAL CORPORATION                       TRANSAMERICA BUSINESS CREDIT
(WESTERN)                                            CORPORATION

By: /S/ Gary D. Cassianni                            By:  /S/ Ari D. Kaplan
Name Printed:  Gary D. Cassianni                     Name Printed:  Ari D. Kaplan
Its:   Vice President                                Its:  Vice President

LA SALLE BANK NATIONAL                               ABN AMRO BANK N.V.
ASSOCIATION (formerly known as
La Salle National Bank)                              By:  /S/ Jeffrey Dodd
                                                     Name Printed:  Jeffrey Dodd
                                                     Its:  Group Vice President
By:  /S/ Douglas C. Colletti
Name Printed:  Douglas C. Colletti                   By:  /S/ L. David Wright
Its:  1st VP                                         Name Printed: L. David Wright
                                                     Its:  Group Vice President

ACKNOWLEDGED AND AGREED TO:
AKRON HOLDING CORPORATION                            KAISER ALUMINUM & CHEMICAL
                                                     INVESTMENT, INC.

By:  /S/ David A. Cheadle                            By:  /S/ David A. Cheadle
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER ALUMINUM PROPERTIES,                          KAISER ALUMINUM TECHNICAL
INC.                                                 SERVICES, INC.

By:  /S/ David A. Cheadle                            By:  /S/ David A. Cheadle
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

OXNARD FORGE DIE COMPANY, INC.                       KAISER ALUMINIUM
                                                     INTERNATIONAL, INC.

By:  /S/ David A. Cheadle                            By:  /S/ David A. Cheadle
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER ALUMINA AUSTRALIA                             KAISER FINANCE CORPORATION
CORPORATION

By:  /S/ David A. Cheadle                            By:  /S/ David A. Cheadle
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

ALPART JAMAICA INC.                                  KAISER JAMAICA CORPORATION

By:  /S/ David A. Cheadle                            By:  /S/ David A. Cheadle
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER BAUXITE COMPANY                               KAISER EXPORT COMPANY

By:  /S/ David A. Cheadle                            By:  /S/ David A. Cheadle
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER MICROMILL HOLDINGS, LLC                       KAISER SIERRA MICROMILLS, LLC

By:  /S/ David A. Cheadle                            By:  /S/ David A. Cheadle
Name Printed:  David A. Cheadle                      Name Printed: David A. Cheadle
Its:  Assistant Treasurer                            Its: Assistant Treasurer

KAISER TEXAS SIERRA MICROMILLS,                      KAISER TEXAS MICROMILL
LLC                                                  HOLDINGS, LLC

By:  /S/ David A. Cheadle                            By:  /S/ David A. Cheadle
Name Printed:  David A. Cheadle                      Name Printed:  David A. Cheadle
Its:  Assistant Treasurer                            Its:  Assistant Treasurer

KAISER BELLWOOD CORPORATION
By:  /S/ David A. Cheadle
Name Printed:  David A. Cheadle
Its:  Assistant Treasurer

EX-4.41

                  AMENDMENT OF NON-NEGOTIABLE INTERCOMPANY NOTE



         WHEREAS, Kaiser Aluminum Corporation ("KAC"), formerly known as
KaiserTech Limited, executed a Non-Negotiable Intercompany Note, dated December
21, 1989, payable to the order of Kaiser Aluminum & Chemical Corporation
("KACC"); and

         WHEREAS, such Non-Negotiable Intercompany Note has been amended, as
memorialized by Confirmation of Amendment of Non-Negotiable Intercompany Note,
dated as of October 6, 1993 (the Non-Negotiable Intercompany Note, as amended
from time to time, the "KT Note"); and

         WHEREAS, the KT Note has been pledged and delivered to BankAmerica
Business Credit, Inc., predecessor of Bank of America, N.A., as the Agent, under
and as defined in that certain Company Pledge Agreement, dated as of February
15, 1994 (as amended, the "Company Pledge Agreement"), among KACC and
BankAmerica Business Credit, Inc.; and

         WHEREAS, KAC and KACC have agreed that the KT Note should be amended,
effective as of December 11, 2000, as hereinafter described; and

         WHEREAS, the Company Pledge Agreement contemplates that Pledged Notes
(as therein defined, including the KT Note) may be amended, modified, or
supplemented from time to time; and

         WHEREAS, the Credit Agreement, dated as of February 15, 1994, among
KACC, KAC, the various financial institutions that are or may from time to time
become parties thereto (collectively, the "Lenders"), and Bank of America, N.A.
(successor to BankAmerica Business Credit, Inc., as agent for the Lenders (as
amended, the "Credit Agreement") permits under clause (k) of the second
paragraph of Section 9.2.14 thereof any amendment of the KT Note that extends
the maturity thereof or reduces the interest rate thereon; and

         WHEREAS, this Amendment of Non-Negotiable Intercompany Note is made in
order to memorialize the agreement between KAC and KACC amending the KT Note and
to evidence the acknowledgment of the Agent of such amendment of the KT Note;

         NOW, THEREFORE, KAC and KACC hereby amend the KT Note, effective as of
December 11, 2000, in the following respect only:

         1.       Section 2 of the KT Note is amended to read as follows in its
 entirety:

                  "2. Subject to Section 5 hereof, no payment of principal or
         interest shall be required to be made on this Note prior to December
         21, 2006. Beginning on December 21, 2006, this Note shall be due and
         payable annually on each anniversary of the date of this Note as to
         principal and interest (including interest accrued hereon from the
         Issuance Date through December 21, 2005, which shall be added to the
         unpaid principal amount hereof) in level installments which, if timely
         made, would be sufficient fully to satisfy the outstanding principal
         balance hereof (including interest accrued hereon from the Issuance
         Date through December 21, 2005) plus interest hereon over a 15-year
         term, commencing on December 21, 2006. Each such level payment shall be
         applied first to interest and the balance to principal."

         IN WITNESS WHEREOF, KAC and KACC have executed this Amendment of Non-
Negotiable Intercompany Note as of December 11, 2000.


                                      Kaiser Aluminum Corporation



                                      By:   /S/ JOHN T. LA DUC
                                         ---------------------------------------
                                      Title:  Executive Vice President and
                                               Chief Financial Officer


                                      Kaiser Aluminum & Chemical Corporation



                                      By:    /S/ DAVID A. CHEADLE
                                         ---------------------------------------
                                      Title:  Assistant Treasurer


         Bank of America, N.A., successor to BankAmerica Business Credit, Inc.,
as Agent under the Company Pledge Agreement, hereby acknowledges that the KT
Note has been amended as hereinabove described.


                                       Bank of America, N.A.



                                       By:   /S/ MICHAEL J. JASAITIS
                                          --------------------------------------
                                       Title:   VP

EX-10.3

                      Amendment of Tax Allocation Agreement
                                     Between
                                   MAXXAM Inc.
                                       and
                     Kaiser Aluminum & Chemical Corporation



         WHEREAS, MAXXAM Inc. ("MAXXAM") and Kaiser Aluminum & Chemical
Corporation ("KACC") executed a tax allocation agreement as of December 21, 1989
covering all taxable years during which KACC and its U.S. subsidiaries (the
"KACC Subgroup") were included in MAXXAM's Federal consolidated income tax
returns (the "Tax Allocation Agreement");

         WHEREAS, the Tax Allocation Agreement is relevant for taxable periods
through June 30, 1993, the date on which the KACC Subgroup became disaffiliated
with MAXXAM, and after which the KACC Subgroup was no longer included in
MAXXAM's Federal consolidated income tax returns;

         WHEREAS, paragraphs 2 and 3 of the Tax Allocation Agreement were
intended to place the KACC Subgroup in the same U.S. income tax position as if
it was a separate affiliated group of corporations filing separate consolidated
tax returns and was never affiliated with MAXXAM;

         WHEREAS, the Tax Allocation Agreement follows general U.S. income tax
laws and principles governed by the Internal Revenue Code of 1986, as amended,
and Treasury Regulations promulgated thereunder;

         WHEREAS, Kaiser Alumina Australia Corporation ("KAAC"), a U.S.
subsidiary of KACC, is currently undergoing an Australian income tax audit (the
"Audit"), including years covered by the Tax Allocation Agreement;

         WHEREAS, Treasury Regulation Section 301.6511(d)-3(a) only allows until
March 15, 2001 to claim foreign tax credits with respect to 1990, beyond which
claims for refunds with respect to such foreign tax credits would be disallowed;

         WHEREAS, the Tax Allocation Agreement similarly allows KACC only until
March 15, 2001 to claim additional foreign tax credits with respect to 1990 if
KAAC subsequently pays additional Australian income taxes attributable to 1990;

         WHEREAS, in view of the foregoing and other relevant facts, MAXXAM and
KACC desire to extend the March 15, 2001 deadline for claiming such foreign tax
credits under the Tax Allocation Agreement for one year to March 15, 2002; and

         WHEREAS, MAXXAM and KACC wish to reach an agreement regarding the
consequences resulting under the Tax Allocation Agreement prior to KAAC agreeing
to any tax assessment received from the Australian Taxation Office or settlement
in connection with the Audit,

         NOW, THEREFORE, (a) MAXXAM agrees to extend to March 15, 2002 the March
15, 2001 deadline under the Tax Allocation Agreement for KACC to claim
additional foreign tax credits that may be attributable to 1990; and (b) KACC
agrees that prior to KAAC agreeing to any tax assessment received from the
Australian Taxation Office with respect to 1990 or settlement in connection with
the Audit, it will reach an agreement with MAXXAM regarding the consequences
resulting under the Tax Allocation Agreement. MAXXAM and KACC agree to use their
respective reasonable best efforts to reach such agreement.

IN WITNESS WHEREOF, MAXXAM and KACC have executed this Amendment of Tax
Allocation Agreement by duly authorized officers thereof as of March 12, 2001.


                                         MAXXAM Inc.


                                         By:     /S/ PAUL N. SCHWARTZ
                                         Title:  President and Chief Financial Officer



                                         Kaiser Aluminum & Chemical Corporation

                                         By:     /S/ JOHN T. LA DUC
                                         Title:  Executive Vice President and
                                                    Chief Financial Officer

EX-10.12

                                    AGREEMENT

         This Agreement is made by and among George T. Haymaker, Jr. ("Optionee")
and Kaiser Aluminum Corporation and Kaiser Aluminum & Chemical Corporation, both
Delaware corporations (together, the "Company").

         WHEREAS, the Company granted to Optionee a stock option to purchase up
to 283,000 shares of common stock, $.01 par value per share, of Kaiser Aluminum
Corporation, and the terms and conditions of such grant are set forth in that
certain Time-Based Stock Option Grant between Optionee and the Company having an
effective date of January 1, 1998, as amended by that certain Director and
Non-Executive Chairman Agreement between Optionee and the Company dated January
1, 2000 (the Time-Based Stock Option Grant, as so amended, the "1998 Grant");
and

         WHEREAS, Optionee and the Company desire to amend the 1998 Grant to
cancel 71,490 of the unvested Option Shares and to specify the vesting
provisions for the 22,844 unvested Option Shares thereafter remaining under the
1998 Grant; and

         WHEREAS, Optionee and the Company desire to evidence the grant of a new
stock option to Optionee to purchase up to 71,490 Option Shares and to specify
the terms and conditions applicable thereto;

         NOW, THEREFORE, Optionee and the Company hereby agree as follows:

         1. All capitalized terms used herein shall have the meanings provided
in the 1998 Grant unless otherwise specifically provided herein.

         2. Effective as of April 14, 2000, the 1998 Grant is amended to cancel
71,490 of the unvested Option Shares. Provided Optionee's Qualified Service
Period has not previously terminated, and subject to the terms of the 1998 Grant
providing for earlier vesting upon the occurrence of a Company Sale Transaction
or certain terminations of Optionee's Employment, the 22,844 unvested Option
Shares thereafter remaining under the 1998 Grant shall become Vested Options as
of 12:01 a.m. Houston time on December 31, 2000. Except as expressly set forth
herein, the terms and conditions of the 1998 Grant are hereby ratified and
affirmed.

         3. This Agreement evidences that the Company has granted to Optionee,
effective as of April 14, 2000, the right, privilege and option to purchase up
to 71,490 Option Shares. Provided that Optionee's Qualified Service Period has
not previously terminated, and subject to the terms of such grant providing for
earlier vesting upon the occurrence of a Company Sale Transaction or certain
terminations of Optionee's Employment, such 71,490 Option Shares shall become
Vested Options as of 12:01 a.m. Houston time on December 31, 2000. Except as
expressly set forth herein, such stock option is granted on the same terms and
conditions as are set forth in the 1998 Grant.

         IN WITNESS WHEREOF, Optionee and the Company have executed this
Agreement effective as of the 14th day of April, 2000.

                                    "COMPANY"

                                    KAISER ALUMINUM CORPORATION


                                    By:      /S/ RAYMOND J. MILCHOVICH
                                    Raymond J. Milchovich
                                    President and Chief Executive Officer


                                    KAISER ALUMINUM & CHEMICAL CORPORATION


                                    By:      /S/ RAYMOND J. MILCHOVICH
                                    Raymond J. Milchovich
                                    President and Chief Executive Officer


                                   "OPTIONEE"


                                   /S/ GEORGE T. HAYMAKER, JR.
                                   George T. Haymaker, Jr.

EX-10.14

                                    AGREEMENT

         This Agreement is made by and among George T. Haymaker, Jr. ("Optionee")
and Kaiser Aluminum Corporation and Kaiser Aluminum & Chemical Corporation, both
Delaware corporations (together, the "Company").

         WHEREAS, the Company granted to Optionee a stock option to purchase up
to 386,000 shares of common stock, $.01 par value per share, of Kaiser Aluminum
Corporation, and the terms and conditions of such grant are set forth in that
certain Performance-Accelerated Stock Option Grant between Optionee and the
Company having an effective date of January 1, 1998, as amended by that certain
Director and Non-Executive Chairman Agreement between Optionee and the Company
dated January 1, 2000 (the Performance-Accelerated Stock Option Grant, as so
amended, the "1998 Grant"); and

         WHEREAS, Optionee and the Company desire (i) to amend the 1998 Grant to
cancel 97,510 Option Shares, and (ii) to evidence the grant of a new stock
option to Optionee to purchase up to 97,510 Option Shares, on the same terms and
conditions as were applicable to the canceled portion of the 1998 Grant;

NOW, THEREFORE, Optionee and the Company hereby agree as follows:

         1. All capitalized terms used herein shall have the meanings provided
in the 1998 Grant unless otherwise specifically provided herein.

         2. Effective as of April 14, 2000, the 1998 Grant is amended to cancel
97,510 Option Shares. Except as expressly set forth herein, the terms and
conditions of the 1998 Grant are hereby ratified and affirmed.

         3. This Agreement evidences that the Company has granted to Optionee,
effective as of April 14, 2000, the right, privilege and option to purchase up
to 97,510 Option Shares and that such grant is on the same terms and conditions
as are set forth in the 1998 Grant.

         IN WITNESS WHEREOF, Optionee and the Company have executed this
Agreement effective as of the 14th day of April, 2000.

                                    "COMPANY"

                                    KAISER ALUMINUM CORPORATION


                                    By:      /S/ RAYMOND J. MILCHOVICH
                                    Raymond J. Milchovich
                                    President and Chief Executive Officer



                                    KAISER ALUMINUM & CHEMICAL CORPORATION


                                    By:      /S/ RAYMOND J. MILCHOVICH
                                    Raymond J. Milchovich
                                    President and Chief Executive Officer


                                    "OPTIONEE"


                                    /S/ GEORGE T. HAYMAKER, JR.
                                    George T. Haymaker, Jr.

EX-10.18

                                    AGREEMENT

         This Agreement is made by and among Raymond J. Milchovich ("Optionee")
and Kaiser Aluminum Corporation and Kaiser Aluminum & Chemical Corporation, both
Delaware corporations (together, the "Company").

         WHEREAS, the Company granted to Optionee a stock option to purchase
635,000 shares of common stock, $.01 par value per share, of Kaiser Aluminum
Corporation, and the terms and conditions of such grant are set forth in that
certain Time-Based Stock Option Grant between Optionee and the Company having an
effective date of July 2, 1998 (the "1998 Grant"); and

         WHEREAS, Optionee and the Company desire to amend the 1998 Grant to
cancel 135,000 of the unvested Option Shares and to specify the vesting
provisions for the 246,000 unvested Option Shares thereafter remaining under the
1998 Grant; and

         WHEREAS, Optionee and the Company desire to evidence the grant of a new
stock option to Optionee to purchase up to 135,000 Option Shares and to specify
the terms and conditions applicable thereto;

         NOW, THEREFORE, Optionee and the Company hereby agree as follows:

         1. All capitalized terms used herein shall have the meanings provided
in the 1998 Grant unless otherwise specifically provided herein.

         2. Effective as of April 12, 2000, the 1998 Grant is amended to cancel
135,000 of the unvested Option Shares. Provided Optionee's Qualified Service
Period has not previously terminated, and subject to the terms of the last
sentence of Paragraph 4 of the 1998 Grant, the 246,000 unvested Option Shares
thereafter remaining under the 1998 Grant shall become Vested Options as of
12:01 a.m. Houston time on the following schedule:

            December 31, 2000                           127,000 Option Shares
            December 31, 2001                           119,000 Option Shares

Except as expressly set forth herein, the terms and conditions of the 1998 Grant
are hereby ratified and affirmed.

         3. This Agreement evidences that the Company has granted to Optionee,
effective as of April 12, 2000, the right, privilege and option to purchase up
to 135,000 Option Shares. Provided Optionee's Qualified Service Period has not
previously terminated, and subject to the same terms as are set forth in the
last sentence of Paragraph 4 of the 1998 Grant, such 135,000 Option Shares shall
become Vested Options as of 12:01 a.m. Houston time on the following schedule:

            December 31, 2001                             8,000 Option Shares
            December 31, 2002                           127,000 Option Shares

Except as expressly set forth herein, such stock option is granted on the same
terms and conditions as are set forth in the 1998 Grant.

         IN WITNESS WHEREOF, Optionee and the Company have executed this
Agreement effective as of the 12th day of April, 2000.

                                            "COMPANY"

                                            KAISER ALUMINUM CORPORATION


                                            By:      /S/ JOHN BARNESON
                                            John Barneson
                                            Vice President and Chief Administrative Officer


                                            KAISER ALUMINUM & CHEMICAL CORPORATION


                                            By:      /S/ JOHN BARNESON
                                            John Barneson
                                            Vice President and Chief Administrative Officer


                                            "OPTIONEE"


                                            /S/ RAYMOND J. MILCHOVICH
                                            Raymond J. Milchovich

EX-10.20

                                    AGREEMENT

         This Agreement is made by and among Raymond J. Milchovich ("Optionee")
and Kaiser Aluminum Corporation and Kaiser Aluminum & Chemical Corporation, both
Delaware corporations (together, the "Company").

         WHEREAS, the Company granted to Optionee a stock option to purchase
750,000 shares of common stock, $.01 par value per share, of Kaiser Aluminum
Corporation, and the terms and conditions of such grant are set forth in that
certain Time-Based Stock Option Grant between Optionee and the Company having an
effective date of June 1, 1999 (the "1999 Grant"); and

         WHEREAS, Optionee and the Company desire to amend the 1999 Grant to
cancel 250,000 of the Option Shares and to allocate such canceled Option Shares
among the Option Price categories and vesting installment dates specified in the
1999 Grant; and

         WHEREAS, Optionee and the Company desire to evidence the grant of a new
stock option to Optionee to purchase up to 250,000 Option Shares and to specify
the terms and conditions applicable thereto;

         NOW, THEREFORE, Optionee and the Company hereby agree as follows:

         1. All capitalized terms used herein shall have the meanings provided
in the 1999 Grant unless otherwise specifically provided herein.

         2. Effective as of April 12, 2000, the 1999 Grant is amended to cancel
250,000 of the Option Shares comprised as follows: 50,000 Option Shares with a
Base Exercise Price of $9.50 per Option Share, 100,000 Option Shares with a Base
Exercise Price of $12.35 per Option Share, and 100,000 Option Shares with a Base
Exercise Price of $14.25 per Option Share. Provided Optionee's Qualified Service
Period has not previously terminated, and subject to the terms of the last
sentence of Paragraph 4 of the 1999 Grant, the Option Shares thereafter
remaining under the 1999 Grant shall become Vested Options, as allocated by Base
Exercise Price, as of 12:01 a.m. Houston time on the following schedule:

                                                  Option Shares
                                                  -------------
                                   $9.50             $12.35           $14.25
                                   -----             ------           ------

            January 1, 2001        30,000            60,000           60,000
            January 1, 2002        30,000            60,000           60,000
            January 1, 2003        30,000            60,000           60,000
            January 1, 2004        10,000            20,000           20,000

Except as expressly set forth herein, the terms and conditions of the 1999 Grant
are hereby ratified and affirmed.

         3. This Agreement evidences that the Company has granted to Optionee,
effective as of April 12, 2000, the right, privilege and option to purchase up
to 250,000 Option Shares comprised as follows: 50,000 Option Shares with a Base
Exercise Price of $9.50 per Option Share, 100,000 Option Shares with a Base
Exercise Price of $12.35 per Option Share, and 100,000 Option Shares with a Base
Exercise Price of $14.25 per Option Share. Provided Optionee's Qualified Service
Period has not previously terminated, and subject to the same terms as are set
forth in the last sentence of Paragraph 4 of the 1999 Grant, such Option Shares
shall become Vested Options, as allocated by Base Exercise Price, as of 12:01
a.m. Houston time on the following schedule:

                                                 Option Shares
                                                 -------------
                                   $9.50             $12.35           $14.25
                                   -----             ------           ------

            January 1, 2004        20,000            40,000           40,000
            January 1, 2005        30,000            60,000           60,000

Except as expressly set forth herein, such stock option is granted on the same
terms and conditions as are set forth in the 1999 Grant.

         IN WITNESS WHEREOF, Optionee and the Company have executed this
Agreement effective as of the 12th day of April, 2000.

                                            "COMPANY"

                                            KAISER ALUMINUM CORPORATION


                                            By:      /S/ JOHN BARNESON
                                            John Barneson
                                            Vice President and Chief Administrative Officer


                                            KAISER ALUMINUM & CHEMICAL CORPORATION


                                            By:      /S/ JOHN BARNESON
                                            John Barneson
                                            Vice President and Chief Administrative Officer


                                            "OPTIONEE"


                                            /S/ RAYMOND J. MILCHOVICH
                                            Raymond J. Milchovich

EX-21

                                                                      Exhibit 21

                                  SUBSIDIARIES

Listed below are the principal subsidiaries of Kaiser Aluminum Corporation, the
jurisdiction of their incorporation or organization, and the names under which
such subsidiaries do business. Certain subsidiaries are omitted which,
considered in the aggregate as a single subsidiary, would not constitute a
significant subsidiary.


                                                                 Place of
                                                                 Incorporation
     Name                                                        or Organization

     Alpart Jamaica Inc. ....................................... Delaware
     Alumina Partners of Jamaica (partnership).................. Delaware
     Anglesey Aluminium Limited................................. United Kingdom
     Kaiser Alumina Australia Corporation....................... Delaware
     Kaiser Aluminium International, Inc........................ Delaware
     Kaiser Aluminum & Chemical Corporation................. Delaware
     Kaiser Aluminum & Chemical of Canada Limited........... Ontario
     Kaiser Bauxite Company..................................... Nevada
     Kaiser Bellwood Corporation................................ Delaware
     Kaiser Finance Corporation ................................ Delaware
     Kaiser Jamaica Bauxite Company (partnership)............... Jamaica
     Kaiser Jamaica Corporation................................. Delaware
     Queensland Alumina Limited................................. Queensland
     Volta Aluminium Company Limited............................ Ghana

EX-23.1

                                                                    Exhibit 23.1

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


         As independent public accountants, we hereby consent to the
incorporation of our reports included and incorporated by reference in this Form
10-K, into the Company's previously filed Registration Statements File No.'s
333-71, 333-16239, 333-36202 and 33-49889.




ARTHUR ANDERSEN LLP
/S/ Arthur Andersen LLP


Houston, Texas
March 27, 2001

EX-23.2

                                                                    EXHIBIT 23.2


         We hereby consent to (i) any references to our firm, or (ii) any
references to advice rendered by our firm contained in Kaiser Aluminum
Corporation's Annual Report on Form 10-K for the year ended December 31, 2000,
which is incorporated into the Company's previously filed Registration
Statements on Form S-3 No.'s 333-16239 and 333-71 and Registration Statements on
Form S-8 No.'s 33-49889 and 333-36202.


                                            WHARTON  LEVIN  EHRMANTRAUT
                                                KLEIN & NASH, P.A.

                                                /S/ Robert D. Klein

March 27, 2001

EX-23.3

                                                                    EXHIBIT 23.3



         With respect to the Registration Statements on Form S-3 No.'s 33-16239
and 333-71 and Registration Statements on Form S-8 No.'s 33-49889 and 333-36202
filed by Kaiser Aluminum Corporation, a Delaware corporation (the "Registration
Statements"), we hereby consent to the use of our name, and to references to
advice rendered by our firm, incorporated by reference into the Registration
Statements from Kaiser Aluminum Corporation's Annual Report on Form 10-K for the
year ended December 31, 2000, under the headings (i) Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources - Commitments and Contingencies, and (ii) Note 12 of Notes to
the Consolidated Financial Statements.


                                    HELLER EHRMAN WHITE & McAULIFFE

                                /S/ Heller Ehrman White & McAuliffe

March 27, 2001