=================================================================

                                      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, 1997
          Commission file number 1-9447



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

                     DELAWARE                          94-3030279
               (State of Incorporation)             (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 March 17, 1998, there were 79,142,903 shares of the Common
          Stock of the registrant outstanding.  Based upon New York Stock
          Exchange closing prices on March 17, 1998, the aggregate market
          value of the registrant's Common Stock held by non-affiliates was
          $270.5 million.

          Certain portions of the registrant's annual report to
          shareholders for the fiscal year ended December 31, 1997, are
          incorporated by reference into Parts I, II, and IV of this Report
          on Form 10-K.  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.


          =================================================================












                                         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 20-24
          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 other exhibits
          and to request copies of such exhibits:



                                        Corporate Secretary
                                        Kaiser Aluminum Corporation
                                        5847 San Felipe, Suite 2600
                                        Houston, Texas  77057-3010
<PAGE>





                                         (i)


                                  TABLE OF CONTENTS

                                                                       Page
                                                                      -----


          PART I                                                          1


               ITEM 1.   BUSINESS                                         1


               ITEM 2.   PROPERTIES                                      10


               ITEM 3.   LEGAL PROCEEDINGS                               10


               ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY  
                         HOLDERS                                         11


          PART II                                                        11


               ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND 
                           RELATED STOCKHOLDER MATTERS                   11


               ITEM 6.   SELECTED FINANCIAL DATA                         12


               ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
                           CONDITION AND RESULTS OF OPERATIONS           12


               ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA     12


               ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 
                           ACCOUNTING AND FINANCIAL DISCLOSURE           12


          PART III                                                       12


               ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
                                                                         12


               ITEM 11.  EXECUTIVE COMPENSATION                          12


               ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                           AND MANAGEMENT                                12


               ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                                                                         12


          PART IV                                                        12
               

               ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                           REPORTS ON FORM 8-K                           12

          SCHEDULE I                                                     15

          SIGNATURES                                                     19

          INDEX OF EXHIBITS                                              20

          EXHIBIT 21     SUBSIDIARIES                                    25


                                         (ii)



          PART I


          ITEM 1.   BUSINESS

          This Annual Report on Form 10-K 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 - Profit Improvement Program," " -
          Business Development in Strategic Areas," " - Production
          Operations," " - Competition," " - Research and Development," and
          " - Environmental Matters," and Item 3. "Legal Proceedings"). 
          Such statements can be identified by the use of forward-looking
          terminology such as "believes," "expects," "may," "estimates,"
          "will," "should," "plans" or "anticipates" or the negative
          thereof or other variations thereon or comparable terminology, or
          by discussions of strategy.  Readers are cautioned that any such
          forward-looking statements are not guarantees of future
          performance and involve significant risks and uncertainties, and
          that actual results may vary materially from those in the
          forward-looking statements as a result of various factors.  These
          factors include the effectiveness of management's strategies and
          decisions, general economic and business conditions, developments
          in technology, new or modified statutory or regulatory
          requirements and changing prices and market conditions.  This
          Report and the financial portion of the Company's 1997 Annual
          Report to Shareholders (see Items 6 through 8 of this Report)
          identify other factors that could cause such differences.  No
          assurance can be given that these are all of the factors that
          could cause actual results to vary materially from the forward-
          looking statements.

          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 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.  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.  In 1997, KACC
          produced approximately 2,945,000 tons* of alumina, of which
          approximately 66% was sold to third parties, and produced
          approximately 493,000 tons of primary aluminum, of which
          approximately 67% was sold to third parties.  KACC is also a
          major domestic supplier of fabricated aluminum products.  In
          1997, KACC shipped approximately 400,000 tons of fabricated
          aluminum products to third parties, which accounted for
          approximately 5% of total United States domestic shipments.  Note
          11 of the Notes to Consolidated Financial Statements contained in
          the Company's 1997 Annual Report to Shareholders (the "Annual
          Report") is incorporated herein by reference.

          The Company's operations are conducted through KACC's business
          units which compete throughout the aluminum industry.  The
          following table sets forth total shipments and intracompany
          transfers of KACC's alumina, primary aluminum, and fabricated
          aluminum operations:

          
<TABLE>

          <CAPTION>
                                                                      Year Ended December 31,
                                                          ----------------------------------------------
                                                                    1997            1996            1995
                                                          --------------  --------------  --------------
                                                                      (in thousands of tons)
          <S>                                             <C>             <C>             <C>
          ALUMINA:
               Shipments to Third Parties                        1,929.8         2,073.7         2,040.1
               Intracompany Transfers                              968.0           912.4           800.6
          PRIMARY ALUMINUM:
               Shipments to Third Parties                          327.9           355.6           271.7
               Intracompany Transfers                              164.2           128.3           217.4
          FABRICATED ALUMINUM PRODUCTS:
               Shipments to Third Parties                          400.0           327.1           368.2

          </TABLE>

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

          ITEM 1.   BUSINESS (CONTINUED)

          Profit Improvement Program

          In October 1996, KACC established a goal of achieving $120
          million per year of pre-tax cost reductions and other profit
          improvements, independent of metal price changes, with the full
          effect planned to be realized in 1998 and beyond, measured
          against 1996 results.  At the end of 1997, KACC had achieved
          approximately half of the desired profit improvement.  This
          program is being effected through reductions in production costs,
          decreases in corporate general and administrative expenses, and
          enhancements to product mix and volume throughput.  There can be
          no assurance that the initiative will result in the desired cost
          reductions and other profit improvements.  See "Management's
          Discussion and Analysis of Financial Condition and Results of
          Operations - Recent Events and Developments" and Note 4 of the
          Notes to Consolidated Financial Statements in the Annual Report.

          Business Development in Strategic Areas

          KACC's strategic objectives include both improving the financial
          performance of its existing facilities (see "-Profit Improvement
          Program") and implementing modifications to its existing
          portfolio of businesses and assets in an effort to focus its
          business activities in areas which hold the best potential for
          improving KACC's financial performance.  KACC is actively
          pursuing opportunities to increase its participation in
          businesses and assets in targeted areas of its portfolio
          consistent with its strategic objectives, by internal investment
          and by acquisition, both domestically and internationally, by
          using its technical expertise and capital to form  joint ventures
          or to acquire equity in aluminum-related facilities.  Recent
          examples of such activities include the formation with Accuride
          Corporation of a joint venture to design, manufacture and market
          heavy duty aluminum wheels for the commercial transportation
          industry, and the acquisition of an aluminum extrusion plant in
          Richmond, Virginia, from Reynolds Metals Company, in the second
          quarter of 1997.  See "-Production Operations."

          Sensitivity to Prices and Hedging Programs

          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 and on KACC's hedging strategies.
          Primary aluminum prices have historically been subject to
          significant cyclical fluctuations.  Alumina prices, as well as
          fabricated aluminum product prices (which vary considerably among
          products), are significantly influenced by changes in the price
          of primary aluminum and generally lag behind primary aluminum
          prices for periods of up to three months.  From time to time in
          the ordinary course of business KACC enters into hedging
          transactions to provide price risk management in respect of its
          net exposure resulting from (i) anticipated sales of alumina,
          primary aluminum, and fabricated aluminum products, less (ii)
          expected purchases of certain items, such as aluminum scrap,
          rolling ingot, and bauxite, whose prices fluctuate with the price
          of primary aluminum.  Forward sales contracts are used by KACC to
          effectively lock-in or fix the price that KACC will receive for
          its shipments.  KACC also uses option contracts (i) to establish
          a minimum price for its product shipments, (ii) to establish a
          "collar" or range of prices for its anticipated sales, and/or
          (iii) to permit KACC to realize possible upside price movements. 
          See Notes 1 and 10 of the Notes to Consolidated Financial
          Statements in the Annual Report.

          ITEM 1.   BUSINESS (CONTINUED)

          Production Operations

          -    Alumina
               -------

          The following table lists KACC's bauxite mining and alumina
          refining facilities as of December 31, 1997:

          
<TABLE>
          <CAPTION>
                                                                                           Annual
                                                                                       Production           Total
                                                                                         Capacity          Annual
                                                                          Company    Available to      Production
          Activity                       Facility        Location       Ownership     the Company        Capacity
          --------------           --------------  --------------  --------------  --------------  --------------
                                                                                           (tons)          (tons)
          <S>                      <C>             <C>             <C>             <C>             <C>
          Bauxite Mining           KJBC(1)         Jamaica                    49%       4,500,000       4,500,000
                                   Alpart(2)       Jamaica                    65%       2,275,000       3,500,000
                                                                                   --------------  --------------

                                                                                        6,775,000       8,000,000
                                                                                   ==============  ==============

          Alumina Refining         Gramercy        Louisiana                 100%       1,050,000       1,050,000
                                   Alpart          Jamaica                    65%         942,500       1,450,000
                                   QAL             Australia                28.3%         973,500       3,440,000
                                                                                   --------------  --------------

                                                                                        2,966,000       5,940,000
                                                                                   ==============  ==============

          </TABLE>


          ------------
          (1)  Although KACC owns 49% of Kaiser Jamaica Bauxite Company
          ("KJBC"), it has the right to receive all of KJBC's output.
          (2)  Alumina Partners of Jamaica ("Alpart") bauxite is refined
          into alumina at the Alpart refinery.

          Bauxite mined in Jamaica by KJBC is refined into alumina at
          KACC's plant at Gramercy, Louisiana, or is sold to third parties.
          In 1979, the Government of Jamaica granted KACC a mining lease
          for the mining of bauxite sufficient to supply KACC's
          then-existing Louisiana alumina refineries at their annual
          capacities of 1,656,000 tons per year until January 31, 2020. 
          Alumina from the Gramercy plant is sold to third parties.

          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.

          In June 1997, Alpart and JAMALCO, a joint venture between
          affiliates of Aluminum Company of America and the government of
          Jamaica, jointly announced that they had signed a non-binding
          letter of intent agreeing to consolidate their bauxite mining
          operations in Jamaica, with the objective of optimizing operating
          and capital costs.  The transaction is subject to various
          conditions, including the negotiation of definitive agreements,
          third party consents, and board approvals.  No assurance can be
          given that the conditions will be satisfied or that the
          transaction will be consummated.

          KACC owns a 28.3% interest in Queensland Alumina Limited ("QAL"),
          which owns the largest and one of the 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 stockholders under long-term tolling
          contracts.  The stockholders, including KACC, purchase bauxite
          from another QAL stockholder under long-term supply contracts. 
          KACC has contracted with QAL to take approximately 792,000 tons
          per year of capacity or pay standby charges.  KACC is
          unconditionally obligated to pay amounts calculated to service
          its share ($97.6 million at December 31, 1997) of certain debt of
          QAL, as well as other QAL costs and expenses, including bauxite
          shipping costs.

          ITEM 1.   BUSINESS (CONTINUED)

          KACC's principal customers for bauxite and alumina consist of
          other aluminum producers that purchase bauxite and
          reduction-grade alumina, trading intermediaries who resell raw
          materials to end-users, and users of chemical-grade alumina.  All
          of KACC's third-party sales of bauxite in 1997 were made to two
          customers, the largest of which accounted for approximately 91%
          of such sales.  KACC also sold alumina in 1997 to 29 customers,
          the largest and top five of which accounted for approximately 24%
          and 85% of such sales, respectively.  See "- Competition."  The
          Company believes that among alumina producers KACC is the world's
          second largest seller of smelter grade alumina to third parties. 
          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 "- Sensitivity to Prices and Hedging
          Programs."

          -    Primary Aluminum Products
               -------------------------

          The following table lists KACC's primary aluminum smelting
          facilities as of December 31, 1997:

          
<TABLE>
          <CAPTION>
                                                                                  Annual Rated           Total           1997
                                                                                      Capacity          Annual        Average
                                                                       Company    Available to           Rated      Operating
          Location                                Facility           Ownership     the Company        Capacity           Rate
          ------------------------------          -------------  -------------  --------------  --------------  -------------
                                                                                        (tons)          (tons)
          <S>                                     <C>                      <C>             <C>             <C>            <C>
          Domestic
               Washington                         Mead                    100%         200,000         200,000           108%
               Washington                         Tacoma                  100%          73,000          73,000           103%
                                                                                --------------  --------------
                    Subtotal                                                           273,000         273,000
                                                                                --------------  --------------
          International
               Ghana                              Valco                    90%         180,000         200,000            76%
               Wales, United Kingdom              Anglesey                 49%          55,000         112,000           118%
                                                                                --------------  --------------
                    Subtotal                                                           235,000         312,000
                                                                                --------------  --------------
                         Total                                                         508,000         585,000
                                                                                ==============  ==============

          </TABLE>


          The Mead facility uses pre-bake technology and produces primary
          aluminum.  Approximately 64% of Mead's 1997 production was used
          at KACC's Trentwood, Washington, rolling mill, and the balance
          was 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.  Both smelters
          have achieved significant production efficiencies through
          retrofit technology and a variety of cost controls, leading to
          increases in production volume and enhancing their ability to
          compete with newer smelters.

          KACC is modernizing and expanding the carbon baking furnace at
          its Mead smelter at an estimated cost of approximately $54.5
          million.  The project will improve the reliability of the carbon
          baking operations, increase productivity, enhance safety, and
          improve the environmental performance of the facility.  The first
          stage of this project, the construction of a new $40.0 million
          90,000 ton per year furnace, has been completed and is in
          operation.  The remaining modernization work is expected to be
          completed in late 1998, when an existing furnace will be rebuilt. 
          A portion of this project was financed with the net proceeds
          (approximately $18.6 million) of 7.6% Solid Waste Disposal
          Revenue Bonds due 2027 issued in March 1997 by the Industrial
          Development Corporation of Spokane County, Washington.

          Electric power represents an important production cost for KACC
          at its aluminum smelters.  In 1995, KACC successfully
          restructured electric power purchase agreements for its
          facilities in the Pacific Northwest, which resulted in
          significantly lower electric power costs in 1996 for the Mead and
          Tacoma, Washington, smelters compared to 1995 electric power
          costs.  KACC continued to benefit from savings in electric power
          costs at those facilities in 1997 and expects to continue to
          benefit from such savings in future years.

          ITEM 1.   BUSINESS (CONTINUED)

          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.  Power for the Valco smelter is supplied under an
          agreement with the Volta River Authority (the "VRA") which
          expires in 2017.  The agreement indexes two-thirds of the price
          of the contract quantity of power to the market price of primary
          aluminum.  The agreement also provides for a review and
          adjustment of the base power rate and the price index every five
          years.  The most recent review was completed in April 1994 for
          the 1994-1998 period.

          Effective January 1, 1998, the VRA reduced the allocation of
          electric power to the Valco smelter.  The Company announced that,
          due to the reduced power allocation, Valco expected to operate
          three potlines in 1998 compared to the four potlines which were
          operated throughout 1997.  During February 1998, Valco and the
          VRA reached an agreement whereby Valco agreed to receive
          compensation in lieu of the power necessary to operate one of its
          three remaining operating potlines.  Compensation under the
          agreement is expected to substantially offset the financial
          impact of the curtailment of that potline.  As a result of the
          curtailment, Valco said that it expected to operate two of its
          five potlines after February 25, 1998.  See "Management's
          Discussion and Analysis of Financial Condition and Results of
          Operations - Recent Events and Developments" in the Annual
          Report.

          KACC owns a 49% interest in the Anglesey Aluminium Limited
          ("Anglesey") aluminum smelter and port facility 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.  Power for the Anglesey
          aluminum smelter is supplied under an agreement which expires in
          2001.

          KACC has developed and installed proprietary retrofit and control
          technology in all of its smelters, as well as at third party
          locations.  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, and a computerized process control and energy management
          system - 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 is actively engaged in efforts to license this
          technology and sell technical and managerial assistance to other
          producers worldwide, and may participate in joint ventures or
          similar business partnerships which employ KACC's technical and
          managerial knowledge.  See "-Research and Development."

          During October 1997, a joint decision was made by a KACC
          subsidiary and its joint venture partner to terminate and
          dissolve the Sino-foreign aluminum joint venture formed in 1995. 
          In January 1998, the KACC subsidiary reached an agreement to sell
          its interests in the venture to its partner.  The terms of the
          agreement are subject to certain governmental approvals by
          officials of the People's Republic of China.

          KACC's principal primary aluminum customers consist of large
          trading intermediaries and metal brokers, who resell primary
          aluminum to fabricated product manufacturers, and large and small
          international aluminum fabricators.  In 1997, KACC sold its
          primary aluminum production not utilized for internal purposes to
          approximately 52 customers, the largest and top five of which
          accounted for approximately 13% and 47% of such sales,
          respectively.  See "- Competition."  Marketing and sales efforts
          are conducted by personnel located in Pleasanton, California,
          Houston, Texas, and Tacoma and Spokane, Washington.  A majority
          of the business unit's sales are based upon long-term
          relationships with metal merchants and end-users.

          -    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.  KACC's fabricated products compete with
          those of numerous domestic and foreign producers and with
          products made of steel, copper, glass, plastic, and other
          materials.  Product quality, price, and availability are the
          principal competitive factors in the market for fabricated
          aluminum products.  KACC has focused its fabricated products
          operations on selected products in which KACC has production
          expertise, high-quality capability, and geographic and other
          competitive advantages.

          ITEM 1.   BUSINESS (CONTINUED)

          Fabricated aluminum products are manufactured by two business
          units - flat-rolled products and engineered products.  The
          products include heat-treated products; body, lid, and tab stock
          for beverage containers; sheet and plate products; screw machine
          stock; redraw rod; forging stock; truck wheels and hubs; air bag
          canisters; engine manifolds; and other castings, forgings and
          extruded products, which are manufactured at plants located in
          principal marketing areas of the United States and Canada.  The
          aluminum utilized in KACC's fabricated products operations is
          comprised of primary aluminum, obtained both internally and from
          third parties, and scrap metal purchased from third parties.

          Flat-Rolled Products - The flat-rolled products business unit
          operates the Trentwood, Washington, rolling mill and the
          Micromill(TM) facility, near Reno, Nevada.  The Trentwood
          facility accounted for approximately 62% of KACC's 1997
          fabricated aluminum products shipments.  The business unit
          supplies the aerospace and general engineering markets
          (producing heat-treat products), the beverage container market
          (producing body, lid, and tab stock), and the specialty coil
          markets (producing automotive brazing sheet, wheel, and tread
          products), both directly and through distributors.

          KACC continues to enhance the process and product mix of its
          Trentwood rolling mill in an effort to maximize its profitability
          and maintain full utilization of the facility.  KACC is
          implementing a plan to expand its annual production capacity of
          heat-treated flat-rolled products at the Trentwood facility by
          approximately one-third over 1996 levels, most of which was
          achieved in 1997. Implementation of the plan also will enable
          KACC to improve the reliability of its heat-treated operations,
          enhance the quality of its heat-treat products, and improve
          Trentwood's operating efficiency.  The project is estimated to
          cost approximately $22.0 million and is expected to be completed
          in late 1998. Global sales of KACC's heat-treat products have
          increased significantly over the last several years and are made
          primarily to the aerospace and general engineering markets, which
          have been experiencing growth in demand.  In 1997, the business
          unit shipped products to approximately 141 customers in the
          aerospace, transportation, and industrial ("ATI") markets, most
          of which were distributors who sell to a variety of industrial
          end-users.  The top five customers in the ATI markets for
          flat-rolled products accounted for approximately 17% of the
          business unit's revenue.

          KACC's flat-rolled products are also sold to beverage container
          manufacturers located in the western United States and in the
          Asian Pacific Rim countries where the Trentwood plant's location
          provides KACC with a transportation advantage.  Quality of
          products for the beverage container industry, service, and
          timeliness of delivery are the primary bases on which KACC
          competes.  In recent years KACC has made significant capital
          expenditures at Trentwood in rolling technology and process
          control to improve the metal integrity, shape and gauge control
          of its products.  The Company believes that such improvements
          have enhanced the quality of KACC's products for the beverage
          container industry and the capacity and efficiency of KACC's
          manufacturing operations, and that KACC is one of the highest
          quality producers of aluminum beverage can stock in the world. 
          In 1997, the business unit had 37 domestic and foreign can stock
          customers.  The largest and top five of such customers accounted
          for approximately 15% and 27%, respectively, of the business
          unit's revenue.  See "- Competition."  The marketing staff for
          the business unit is located at the Trentwood facility and in
          Pleasanton, California.  Sales are made directly to end-use
          customers and distributors from four sales offices in the United
          States, from sales offices in England and Japan, and by
          independent sales agents in Europe, Asia and Latin America.

          The first Micromill(TM) facility, constructed in 1996 as a
          demonstration and production facility, was in a start-up mode
          during 1997. Micromill(TM) technology is based on a proprietary
          thin-strip, high-speed, continuous-belt casting technique linked
          directly to hot and cold rolling mills.  Assuming the successful
          implementation and commercialization of the Micromill(TM)
          technology, the capital and conversion costs of Micromill(TM)
          facilities are expected to be significantly lower than
          conventional rolling mills.  KACC is continuing its efforts to
          implement the Micromill(TM) technology on a full-scale basis. 
          The facility is currently shipping qualification quantities of
          product to various customers.  However, the Micromill(TM)
          technology has not yet been fully implemented or
          commercialized, and there can be no assurance that it will be
          successfully implemented and commercialized for use at full-scale
          facilities.

          Engineered Products - The engineered products business unit
          maintains its headquarters and a sales and engineering office in
          Southfield, Michigan, which works with car makers and other
          customers, the Company's Center for Technology ("CFT," see
          "-Research and Development"), and plant personnel to create new
          automotive component designs and to improve existing products. 
          The business unit operates soft-alloy and hard-alloy extrusion
          facilities and engineered component (forging and casting) 
          facilities in the United States and in Canada.  Soft-alloy
          extrusion facilities are located in Los Angeles, California;
          Santa Fe Springs, California; Sherman, Texas; Richmond, Virginia;
          and London, Ontario, Canada.  Each of the soft-alloy extrusion
          facilities has fabricating capabilities and provides finishing
          services.  The Richmond, Virginia, facility, acquired in mid-1997
          by Kaiser Bellwood Corporation, a wholly-owned subsidiary of the
          Company, increased KACC's extruded products capacity and enhanced
          its existing extrusion business due to that facility's ability to
          manufacture seamless tubing and large circular extrusions and to
          serve the distribution and ground transportation industries. 
          Hard-alloy rod and bar extrusion facilities are located in
          Newark, Ohio, and Jackson, Tennessee, which produce screw machine
          stock, redraw rod, forging stock, and billet.  A facility located
          in Richland, Washington, produces seamless tubing in both hard
          and soft alloys for the automotive, other transportation, export,
          recreation, agriculture, and other industrial markets.  The
          business unit also operates a cathodic protection business
          located in Tulsa, Oklahoma, that extrudes both aluminum and
          magnesium.  Major markets for extruded products are in the
          transportation industry, to which the business unit provides
          extruded shapes for automobiles, trucks, trailers, cabs, and
          shipping containers, and in the distribution, durable goods,
          defense, building and construction, ordnance and electrical
          markets.

          The engineered products business unit operates forging facilities
          at Oxnard, California, and Greenwood, South Carolina; a machine
          shop at Greenwood, South Carolina; and a casting facility in
          Canton, Ohio; and participates in a joint venture with Accuride
          Corporation, located in Erie, Pennsylvania, and Cuyahoga Falls,
          Ohio, that designs, manufactures and markets aluminum wheels for
          the commercial transportation industry.  The business unit is one
          of the largest producers of aluminum forgings in the United
          States and is a major supplier of high-quality forged parts to
          customers in the automotive, commercial vehicle and ordnance
          markets. The high strength-to-weight properties of forged and
          cast aluminum make it particularly well-suited for automotive
          applications. The business unit's casting facility manufactures
          aluminum engine manifolds for the automobile, truck and marine
          markets.

          In 1997, the engineered products business unit had 641 customers,
          the largest and top five of which accounted for approximately 8%
          and 18%, respectively, of the business unit's revenue.  See "-
          Competition."  Sales are made directly from plants, as well as
          marketing locations elsewhere in the United States.

          Competition

          Aluminum competes in many markets with steel, copper, glass,
          plastic, and other materials.  In recent years, plastic
          containers have increased and glass containers have decreased
          their respective shares of the soft drink sector of the beverage
          container market.  In the United States, beverage container
          materials, including aluminum, face increased competition from
          plastics as increased polyethylene terephthalate ("PET")
          container capacity is brought on line by plastics manufacturers. 
          Within the aluminum business, KACC competes with both domestic
          and foreign producers of bauxite, alumina and primary aluminum,
          and with domestic and foreign fabricators.  Many of KACC's
          competitors have greater financial resources than KACC.  KACC's
          principal competitors in the sale of alumina include Alcoa
          Alumina & Chemicals L.L.C., Billiton Marketing and Trading BV,
          and Alcan Aluminium Limited.  KACC competes with most aluminum
          producers in the sale of primary aluminum.

          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.  KACC also competes with a wide range of domestic
          and international fabricators in the sale of fabricated aluminum
          products.  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 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

          KACC conducts research and development activities principally at
          two facilities - CFT in Pleasanton, California, and the Northwest
          Engineering Center adjacent to the Mead smelter in Washington. 
          Net expenditures for company-sponsored research and development
          activities were $19.7 million in 1997, $20.5 million in 1996, and
          $18.5 million in 1995.  KACC's research staff totaled 133 at
          December 31, 1997.  KACC estimates that research and development
          net expenditures will be approximately $11.6 million in 1998.

          ITEM 1.   BUSINESS (CONTINUED)

          CFT performs research and development across a range of aluminum
          process and product technologies to support KACC's business units
          and new business opportunities.  It also selectively offers
          technical services to third parties.  Significant efforts are
          directed at product and process technology for the aircraft,
          automotive, and can sheet markets, and aluminum reduction cell
          models which are applied to improving cell designs and operating
          conditions.  The Northwest Engineering Center maintains
          specialized laboratories and a miniature carbon plant where
          experiments with new anode and cathode technology are performed. 
          The Northwest Engineering Center supports KACC's primary aluminum
          smelters, and concentrates on the development of cost-effective
          technical innovations such as equipment and process improvements.

          CFT and the Reno, Nevada, facility are continuing their efforts
          to implement the Micromill(TM) technology for the production of
          can sheet and other sheet products.  See "-Production Operations
          - Fabricated Aluminum Products - Flat-Rolled Products."

          KACC licenses its technology and sells technical and managerial
          assistance to other producers worldwide.  KACC's technology has
          been installed in alumina refineries, aluminum smelters and
          rolling mills located in the United States, Jamaica, Sweden,
          Germany, Russia, India, Australia, Korea, New Zealand, Ghana,
          United Arab Emirates, Bahrain, Venezuela, Brazil, and the United
          Kingdom.  KACC has technical services contracts with smelters in
          Wales, Africa, Europe, the Middle East, and India.

          Employees

          During 1997, KACC employed an average of 9,553 persons, compared
          with an average of 9,567 employees in 1996, and 9,546 employees
          in 1995.  At December 31, 1997, KACC's work force was 9,597,
          including a domestic work force of 6,081, of whom 4,118 were paid
          at an hourly rate.  Most hourly paid domestic employees are
          covered by collective bargaining agreements with various labor
          unions.  Approximately 72% of such employees are covered by a
          master agreement (the "Labor Contract") with the United
          Steelworkers of America which expires September 30, 1998.  The
          Labor Contract covers KACC's plants in Spokane (Trentwood and
          Mead) and Tacoma, Washington; Gramercy, Louisiana; and Newark,
          Ohio.  The Company anticipates that the Labor Contract will be
          renegotiated during 1998.

          The Labor Contract provides for base wages at all covered plants. 
          In addition, workers covered by the Labor Contract may receive
          quarterly or more frequent bonus payments based on various
          indices of profitability, productivity, efficiency, and other
          aspects of specific plant or departmental performance, as well
          as, in certain cases, the price of alumina or primary aluminum. 
          Pursuant to the Labor Contract, base wage rates were raised
          effective November 3, 1997, and an amount in respect of the cost
          of living adjustment under the previous master agreement has been
          phased into base wages.  In the first half of 1998, KACC will
          acquire up to $4,000 per employee (80 shares) of preference stock
          held in a stock plan for the benefit of certain employees covered
          by the Labor Contract.  KACC will make comparable acquisitions of
          preference stock held for the benefit of certain salaried
          employees.

          Management considers KACC's employee relations to be
          satisfactory.

          Environmental Matters

          The Company and KACC are subject to a wide variety of
          international, federal, state and local environmental laws and
          regulations (the "Environmental Laws").  The Environmental Laws
          regulate, among other things, air and water emissions and
          discharges; the generation, storage, treatment, transportation,
          and disposal of solid and hazardous waste; the release of
          hazardous or toxic substances, pollutants and contaminants into
          the environment; and, in certain instances, the environmental
          condition of industrial property prior to transfer or sale.  In
          addition, the Company and KACC are subject to various federal,
          state, and local workplace health and safety laws and regulations
          ("Health Laws").

          From time to time, KACC is subject, with respect to its current
          and former operations, to fines or penalties assessed for alleged
          breaches of the Environmental and Health Laws and to claims and
          litigation brought by federal, state or local agencies and by
          private parties seeking remedial or other enforcement action
          under the Environmental and Health Laws or damages related to
          alleged injuries to health or to the environment, including
          claims with respect to certain waste disposal sites and the
          remediation of sites presently or formerly operated by KACC. KACC
          currently 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").  See "Legal Proceedings."  KACC, along with
          certain other entities, has been named as a Potentially
          Responsible Party ("PRP") for remedial costs at certain
          third-party sites listed on the National Priorities List under
          CERCLA and, in certain instances, may be exposed to joint and
          several liability for those costs or damages to natural
          resources. KACC's Mead, Washington, facility has been listed on
          the National Priorities List under CERCLA.  The Washington State
          Department of Ecology has advised KACC that there are several
          options for remediation at the Mead facility that would be
          acceptable to the Department.  KACC expects that one of these
          remedial options will be agreed upon and incorporated into a
          Consent Decree.  In addition, in connection with certain of its
          asset sales, KACC has agreed to indemnify the purchasers with
          respect to certain liabilities (and associated expenses)
          resulting from acts or omissions arising prior to such
          dispositions, including environmental liabilities.

          Based on the Company's evaluation of these and other
          environmental matters, the Company has established environmental
          accruals, primarily related to potential solid waste disposal and
          soil and groundwater remediation matters.  At December 31, 1997,
          the balance of such accruals, which are primarily included in
          Long-term liabilities, was $29.7 million.  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 to be
          performed.  The Company expects remediation to occur over the
          next several years and estimates that annual expenditures to be
          charged to these environmental accruals will be approximately
          $3.0 million to $8.0 million per year for the years 1998 through
          2002 and an aggregate of approximately $8.0 million thereafter.
          Cash expenditures of $5.6 million in 1997, $8.8 million in 1996,
          and $4.5 million in 1995 were charged to previously established
          accruals relating to environmental costs.  Approximately $5.1
          million is expected to be charged to such accruals in 1998.

          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 $18.0 million.  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, the Company 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.  In addition to cash expenditures
          charged to environmental accruals, environmental capital spending
          was $6.8 million in 1997, $18.4 million in 1996, and $9.2 million
          in 1995.  Annual operating costs for pollution control, not
          including corporate overhead or depreciation, were approximately
          $27.5 million in 1997, $30.1 million in 1996, and $26.0 million
          in 1995.  Legislative, regulatory and economic uncertainties make
          it difficult to project future spending for these purposes. 
          However, the Company currently anticipates that in the 1998-1999
          period, environmental capital spending will be within the range
          of approximately $5.0 million to $7.0 million per year, and
          operating costs for pollution control will be approximately $35.0
          million per year.

          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 at
          least 20 years.  See "Management's Discussion and Analysis of
          Financial Condition and Results of Operations - Environmental and
          Asbestos Contingencies" in the Annual Report.

          The portion of Note 9 of the Notes to Consolidated Financial
          Statements in the Annual Report under the headings "Environmental
          Contingencies" and "Asbestos Contingencies" is incorporated
          herein by reference.


 
         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 "Business - The
          Company - Production 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 and alumina facility 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.

          KACC's obligations under the Credit Agreement entered into on
          February 15, 1994, as amended (the "Credit Agreement"), are
          secured by, among other things, mortgages on KACC's major
          domestic plants (other than the Gramercy alumina refinery and
          Nevada Micromill(TM)).  See "Management's Discussion and Analysis
          of Financial Condition and Results of Operations - Financing
          Activities and Liquidity" and Note 5 of the Notes to Consolidated
          Financial Statements in the Annual Report.


          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, above, for cautionary
          information with respect to such forward-looking statements.

          Aberdeen Pesticide Dumps Site Matter

          The Aberdeen Pesticide Dumps Site, listed on the Superfund
          National Priorities List, is composed of five separate sites
          around the town of Aberdeen, North Carolina (collectively, the
          "Sites").  The Sites are of concern to the United States
          Environmental Protection Agency (the "EPA") because of their past
          use as either pesticide formulation facilities or pesticide
          disposal areas from approximately the mid-1930's through the
          late-1980's.  The EPA issued unilateral Administrative Orders
          under Section 106(a) of CERCLA ordering the respondents,
          including KACC, to perform the soil remedial design and remedial
          action and groundwater remediation for three of the Sites.  In
          March 1997, nine of the corporate respondents, including KACC,
          entered into a Settlement Agreement and Participation Agreement
          which allocates one hundred percent of all costs incurred or to
          be incurred at each of the Sites.  Thereafter, the nine
          respondents entered into a Partial Consent Decree with the United 
          States Department of Justice (the "DOJ") and the EPA regarding
          the work to be performed by the respondents and their
          responsibility for past and future response costs incurred by the
          United States.  This Partial Consent Decree was lodged with the
          United States District Court in December 1997.  Based on current
          estimates of future costs, the Company believes that KACC's
          aggregate financial exposure at these Sites is less that $2.0
          million.

          United States of America v. Kaiser Aluminum & Chemical
          Corporation

          In February 1989, a civil action was filed by the DOJ at the
          request of the EPA against KACC in the United States District
          Court alleging that emissions from certain stacks at KACC's
          Trentwood facility in Spokane, Washington, intermittently
          violated the opacity standard contained in the Washington State
          Implementation Plan ("SIP"), approved by the EPA under the
          federal Clean Air Act.  KACC and the EPA, without adjudication of
          any issue of fact or law, and without any admission of the
          violations alleged in the underlying complaint, have entered into
          a Consent Decree, which was approved by a Consent Order entered
          by the United States District Court for the Eastern District of
          Washington in January 1996.  As approved, the Consent Decree
          settles the underlying disputes and requires KACC to (i) pay a
          $.5 million civil penalty (which penalty has been paid), (ii)
          complete a program of plant improvements and operational changes
          that began in 1990 at its Trentwood facility, including the
          installation of an emission control system to capture particulate
          emissions from certain furnaces, and (iii) achieve and maintain
          furnace compliance with the opacity standard in the Washington
          SIP.  KACC has completed the installation of the emission control
          system.  If the relevant furnaces continue to show compliance
          through July 15, 1998, KACC intends to request termination of the
          Consent Decree.

          ITEM 3.   LEGAL PROCEEDINGS (CONTINUED)

          Hammons v. Alcan Aluminum Corp. et al

          On March 5, 1996, a class action complaint was filed against the
          Company, Alcan Aluminum Corp., Aluminum Company of America,
          Alumax, Inc, Reynolds Metal Company, and the Aluminum Association
          in the Superior Court of California for the County of Los
          Angeles, alleging that the defendants conspired, in violation of
          the California Cartwright Act (Bus. & Prof. Code Section16720 &
          16750), in conjunction with a Memorandum of Understanding ("MOU")
          entered into in 1994 by representatives of Australia, Canada, the
          European Union, Norway, the Russian Federation and the United
          States, to restrict the production of primary aluminum resulting
          in rises in prices for primary aluminum and aluminum products. 
          The complaint seeks certification of a class consisting of
          persons who at any time between January 1, 1994, and the date of
          the complaint purchased aluminum or aluminum products
          manufactured by one or more of the defendants and estimates
          damages sustained by the class to be $4.4 billion during the year
          1994, before trebling.  Plaintiff's counsel has estimated damages
          to be $4.4 billion per year for each of the two years the MOU was
          active, which when trebled equals $26.4 billion.  On April 2,
          1996, the case was removed to the United States District Court
          for the Central District of California.  On July 11, 1996, the
          Court granted summary judgment in favor of the Company and other
          defendants and dismissed the complaint as to all defendants.  On
          July 18, 1996, the plaintiff filed a notice of appeal to the
          United States Court of Appeals for the Ninth Circuit.  On
          December 11, 1997, the United States Court of Appeals for the
          Ninth Circuit affirmed the decision of the District Court.  On
          December 23, 1997, the plaintiff filed a petition for rehearing
          en banc.

          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 at
          least 20 years.  Subsequent to December 31, 1997, KACC reached
          agreements settling approximately 25,000 of the pending asbestos-
          related claims.  Also, subsequent to year-end 1997, KACC reached
          agreements on asbestos-related coverage matters with two
          insurance carriers under which KACC collected a total of
          approximately $17.5 million.  For additional information, see
          "Management's Discussion and Analysis of Financial Condition and
          Results of Operations - Environmental and Asbestos Contingencies"
          in the Annual Report.  The portion of Note 9 of the Notes to
          Consolidated Financial Statements in the Annual Report under the
          heading "Asbestos Contingencies" 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.


          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 1997.


          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 March 17, 1998, was 349.  Page 51
          of the Annual Report, and the information in Note 5 of the Notes
          to Consolidated Financial Statements under the heading "Loan
          Covenants and Restrictions" at page 33 of the Annual Report, are
          incorporated herein by reference.  The Company has not paid any
          dividends on its Common Stock during the two most recent fiscal
          years.

          The Credit Agreement (Exhibits 4.12 through 4.24 to this Report)
          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
          (Exhibits 4.1 through 4.11 to this Report) 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. 
          Exhibits 4.1 through 4.24 to this Report, Note 5 of the Notes to
          Consolidated Financial Statements at pages 32-33 of the Annual
          Report, and the information under the headings "Financing
          Activities and Liquidity" and "Capital Structure" at page 20 of
          the Annual Report, are incorporated herein by reference.


          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
          page 14 of the Annual Report, to Note 1 of the Notes to
          Consolidated Financial Statements at pages 27-29 of the Annual
          Report, and to pages 49-50 of the Annual Report.


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

          Pages 14-22 of the Annual Report are incorporated herein by
          reference.


          ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          Pages 23-48 and page 51 of the Annual Report are incorporated
          herein by reference.


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

                    The Consolidated Financial Statements of the Company,
                    the Notes to Consolidated Financial Statements, the
                    Report of Independent Public Accountants, and Quarterly
                    Financial Data are included on pages 23-48 and 51 of
                    the Annual Report.

               2.   Financial Statement Schedules                     Page
                    -----------------------------                     ----
                    Report of Independent Public Accountants          14

                    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                                           15-18

                    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 20),
                    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 20), which
               index is incorporated herein by reference.


                       REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

          We have audited in accordance with generally accepted auditing
          standards, 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 February 16, 1998.  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
          February 16, 1998



                                      SCHEDULE I
                      CONDENSED BALANCE SHEETS - PARENT COMPANY

                    (In millions of dollars, except share amounts)

          
<TABLE>
          <CAPTION>
                                                                                             December 31,
                                                                                ------------------------------
                                                                                          1997            1996
                                                                                --------------  --------------
          <S>                                                                   <C>             <C>
          ASSETS
          Current assets:
               Note receivable from KACC                                        $         -     $         8.6 
                                                                                --------------  --------------
                         Total current assets                                             -               8.6 
          Investment in KACC                                                          1,802.8         1,641.2 
                                                                                --------------  --------------
                         Total                                                  $     1,802.8   $     1,649.8 
                                                                                ==============  ==============
          LIABILITIES AND STOCKHOLDERS' EQUITY
          Current liabilities                                                   $         3.2   $         2.4 
          Intercompany note payable to KACC, including accrued interest               1,682.6         1,578.1 
          Stockholders' equity:
               PRIDES Convertible, par value $.05, issued and outstanding,                -                .4 
                    8,673,850 in 1996
               Common stock, par value $.01, authorized 100,000,000 shares:
                    issued and outstanding 78,980,881 and 71,646,789 in 1997 and
                    1996                                                                   .8              .7 
               Additional capital                                                       533.8           531.1 
               Accumulated deficit                                                     (417.6)         (460.1)
               Additional minimum pension liability                                       -              (2.8)
                                                                                --------------  --------------
                         Total stockholders' equity                                     117.0            69.3 
                                                                                --------------  --------------

                         Total                                                  $     1,802.8   $      1,649.8
                                                                                ==============  ==============

          </TABLE>




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


                                      SCHEDULE I
                   CONDENSED STATEMENTS OF INCOME - PARENT COMPANY

                               (In millions of dollars)

          
<TABLE>

          <CAPTION>
                                                                         December 31,
                                                        ----------------------------------------------
                                                                  1997            1996            1995
                                                        --------------  --------------  --------------
          <S>                                           <C>             <C>             <C>
          Equity in income of KACC                      $       154.2   $       108.7   $       152.8 

          Administrative and general expenses                    (1.7)           (2.2)            (.4)

          Interest expense                                     (104.5)          (98.3)          (92.1)
                                                        --------------  --------------  --------------

          Net income                                    $        48.0   $         8.2   $         60.3
                                                        ==============  ==============  ==============

          </TABLE>



           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)

          
<TABLE>
          <CAPTION>



                                                                                         December 31,
                                                                      ----------------------------------------------
                                                                                1997            1996            1995
                                                                      --------------  --------------  --------------
          <S>                                                         <C>             <C>             <C>
          Cash flows from operating activities:
               Net income                                             $        48.0   $         8.2   $        60.3 
               Adjustments to reconcile net income to net cash used
                    for operating activities:
                         Equity in income of KACC                            (154.2)         (108.7)         (152.8)
                         Accrued interest on intercompany note                104.5            98.3            92.1 
                              payable to KACC
                         Increase (decrease) in current liabilities             1.6             (.9)             .2 
                                                                      --------------  --------------  --------------
                              Net cash used for operating activities            (.1)           (3.1)            (.2)
                                                                      --------------  --------------  --------------
          Cash flows from investing activities:
               Investment in KACC                                               (.3)            (.1)           (1.2)
                                                                      -------------   -------------   -------------
                              Net cash used for investing activities            (.3)            (.1)           (1.2)
                                                                      -------------   -------------   -------------
          Cash flows from financing activities:
               Dividends paid                                                  (4.2)          (10.5)          (20.8)
               Capital stock issued                                              .4              .1             1.2 
               Intercompany note issued by KACC - net                           4.2            13.4            15.5 
                                                                      -------------   -------------   -------------
                    Net cash provided by (used for) financing                    .4             3.0            (4.1)
                         activities                                   -------------   -------------   -------------
          Net (decrease) increase in cash and cash equivalents                  -               (.2)           (5.5)
               during the year
          Cash and cash equivalents at beginning of year                        -                .2             5.7 
                                                                      -------------   -------------   -------------

          Cash and cash equivalents at end of year                    $         -     $         -     $          .2 
                                                                      =============   =============   =============
          Supplemental disclosure of non-cash investing activities:
                    Non-cash investment in KACC                       $         4.4             -     $         9.9 




          </TABLE>



           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 1997 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 6-5/8%.  No interest or principal
               payments are due until December 31, 2000, after which
               interest and principal will be payable over a 15-year term
               pursuant to a predetermined schedule.


          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
               substantially by all significant subsidiaries of KACC.  See
               Note 5 of the 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 26, 1998         By  George T. Haymaker, Jr.    
                                             ------------------------------
                                                 George T. Haymaker, Jr.
                                                  Chairman of the Board
                                               and Chief Executive Officer

               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.

               Date:  March 26, 1998             George T. Haymaker, Jr.    
                                             ------------------------------
                                                 George T. Haymaker, Jr.
                                                  Chairman of the Board
                                               and Chief Executive Officer
                                              (Principal Executive Officer)

               Date:  March 26, 1998                 John T. La Duc        
                                             ------------------------------
                                                     John T. La Duc
                                                Vice President and Chief
                                                   Financial Officer 
                                              (Principal Financial Officer)

               Date:  March 26, 1998                Daniel D. Maddox       
                                             ------------------------------
                                                    Daniel D. Maddox
                                                 Controller - Corporate
                                               Consolidation and Reporting
                                             (Principal Accounting Officer)

               Date:  March 26, 1998              Robert J. Cruikshank     
                                             ------------------------------
                                                  Robert J. Cruikshank
                                                        Director

               Date:  March 26, 1998               Charles E. Hurwitz      
                                             ------------------------------
                                                   Charles E. Hurwitz
                                                        Director

               Date:  March 26, 1998                  Ezra G. Levin         
                                             ------------------------------
                                                      Ezra G. Levin
                                                        Director

               Date:  March 26, 1998                  Robert Marcus         
                                             ------------------------------
                                                      Robert Marcus
                                                        Director

               Date:  March 26, 1998                Robert J. Petris       
                                             ------------------------------
                                                    Robert J. Petris
                                                        Director


                                  INDEX OF EXHIBITS

          Exhibit
          Number         Description
          ------         -----------

           3.1 Restated Certificate of Incorporation of Kaiser Aluminum
               Corporation (the "Company" or "KAC"), dated February 21,
               1991 (incorporated by reference to Exhibit 3.1 to Amendment
               No. 2 to the Registration Statement on Form  S-1, dated June
               11, 1991, filed by KAC, Registration No. 33-37895).

           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 Kaiser Aluminum Corporation,
               dated February 12, 1998.

           3.4 Amended and Restated By-Laws of Kaiser Aluminum Corporation,
               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 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 9-7/8%
               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).

           4.6 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).

           4.7 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).

           4.8 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 10-7/8% 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).

          Exhibit
          Number         Description
          ------         -----------

           4.9 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).

           4.10     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).

           4.11     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).

           4.12     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).

           4.13     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).

           4.14     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).

           4.15     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).

           4.16     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).

           4.17     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).

           4.18     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).

          Exhibit
          Number         Description
          ------         -----------

           4.19     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).

           4.20     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,
               Kaiser, 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).

           4.21     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 From 10-Q for
               the quarterly period ended June 30, 1997, filed by KAC,
               File No. 1-9447).

           4.22     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).

           4.23     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).

          *4.24     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.

           4.25     Intercompany Note 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
               Inc. ("MAXXAM"), File No. 1-3924). 

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

           4.27     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).

           4.28     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). 



          Exhibit
          Number         Description
          ------         -----------

           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     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).

           10.4     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 10.5 - 10.14, inclusive]

           10.5     KACC's Bonus Plan (incorporated by reference to Exhibit
               10.25 to Amendment No. 6 to the Registration Statement
               on Form S-1, dated December 14, 1989, filed by KACC,
               Registration No. 33-30645).

           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    Employment Agreement, dated April 1, 1993, among KAC,
               KACC, and George T. Haymaker, Jr. (incorporated by
               reference to Exhibit 10.2 to the Report on Form 10-Q
               for the quarterly period ended March 31, 1993, filed by
               KAC, File No. 1-9447).

           10.11    First Amendment to Employment Agreement by and between
               KACC, KAC and George T. Haymaker, Jr. (incorporated by
               reference to Exhibit 10 to the Report on Form 10-Q for
               the quarterly period ended June 30, 1996, filed by KAC,
               File No. 1-9447).

          *10.12    Second Amendment to Employment Agreement, dated as of
               December 10, 1997, by and between KAC, KACC, and George
               T. Haymaker, Jr.

           10.13    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).

           10.14    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).

          *13  The portions of KAC's Annual Report to shareholders for the
               year ended December 31, 1997, which are incorporated by
               reference into this Report.


          Exhibit
          Number         Description
          ------         -----------

          *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 Thelen, Marrin, Johnson & Bridges LLP.

          *27  Financial Data Schedule.
           
          ----------
           
          *    Filed herewith

                                                                 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 Finance Corporation                   Delaware
               Kaiser Jamaica Bauxite Company (partnership) Jamaica
               Kaiser Jamaica Corporation                   Delaware
               Queensland Alumina Limited                   Queensland
               Volta Aluminium Company Limited              Ghana
<PAGE>





          Principal California                     Oklahoma
          Domestic  ----------                     --------
          Operations     Los Angeles (City              Tulsa
          (Partial List) of Commerce)                        Engineered
                              Engineered                     Products
                              Products             Pennsylvania
                         Los Angeles (Santa        ------------
                         Fe Springs)                    Erie (50%)
                              Engineered                     Engineered
                              Products                       Products
                              Fabricating          South Carolina
                         Oxnard                    --------------
                              Engineered                Greenwood
                              Products                       Engineered
                         Pleasanton                          Products
                              R&D at the                Greenwood
                              Center                         Engineered
                              for                            Products
                              Technology,                    Machine Shop
                              Administrative       Tennessee
                              Offices              ---------
                    Florida                             Jackson
                    -------                                  Engineered
                         Mulberry                            Products
                           Sodium                  Texas
                           Silicofluoride,         -----
                           Potassium                    Houston
                           Silicofluoride                    Kaiser
                    Louisiana                                Aluminum
                    ---------                                Corporation
                         Baton Rouge                         Headquarters
                              Environmental             Sherman
                              Offices                        Engineered
                         Gramercy                            Products
                              Alumina              Virginia
                    Michigan                       --------
                    --------                            Richmond
                         Detroit                             Engineered
                           (Southfield)                      Products
                              Automotive           Washington
                              Product              ----------
                              Development               Mead
                              and Sales                      Primary
                    Nevada                                   Aluminum,
                    ------                                   Northwest
                         Reno                                Engineering
                              Micromill(TM)                  Center
                    Ohio                                Richland
                    ----                                     Engineered
                         Canton                              Products
                              Engineered                Tacoma
                              Products                       Primary
                         Cuyahoga Falls                      Aluminum
                         (50%)                          Trentwood
                              Engineered                     Flat-Rolled
                              Products                       Products
                         Newark
                              Engineered
                              Products

          -----------------------------------------------------------------
          Principal      Australia                 Jamaica
          Worldwide      ---------                 -------
          Operations          Queensland                Alumina Partners of
          (Partial List)      Alumina                   Jamaica (65%)
                              Limited                     Bauxite, Alumina
                              (28.3%)                   Kaiser Jamaica
                                Alumina                 Bauxite Company
                         Canada                         (49%)
                         ------                           Bauxite
                              Kaiser               Russia
                              Aluminum &           ------
                              Chemical of               Kaiser Aluminium
                              Canada Limited            Russia, Inc. (100%)
                              (100%)                      International
                              Engineered                  Business
                              Products                    Development
                         Ghana                     Wales, United Kingdom
                         -----                     ---------------------
                         Volta Aluminium                Anglesey Aluminium
                         Company Limited                Limited (49%)
                         (90%)                            Primary Aluminum
                           Primary Aluminum






        KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

        M A N A G E M E N T ' S  D I S C U S S I O N  A N D  A N A L Y S I S 
        O F  F I N A N C I A L  C O N D I T I O N  A N D  R E S U L T S  O F 
        O P E R A T I O N S 

        Kaiser Aluminum Corporation ("Kaiser" or the "Company"), through
        its wholly owned subsidiary, Kaiser Aluminum & Chemical Corporation
        ("KACC"), operates in two business segments: bauxite and alumina,
        and aluminum processing.  As an integrated aluminum producer, the
        Company uses a portion of its bauxite, alumina, and primary
        aluminum production for additional processing at certain of its
        facilities.  Intracompany shipments and sales are excluded from the
        information set forth in the table below.  The table below provides
        selected operational and financial information on a consolidated
        basis with respect to the Company for the years ended December 31,
        1997, 1996, and 1995.  The following should be read in conjunction
        with the Company's consolidated financial statements and the notes
        thereto, contained elsewhere herein.

        
<TABLE>

        <CAPTION>
                                                                          Year Ended December 31,
                                                              ----------------------------------------------
        (In millions of dollars, except shipments and prices)           1997            1996            1995
        ----------------------------------------------------------------------------------------------------
        <S>                                                   <C>             <C>             <C>
        Shipments: (000 tons) (1)
         Alumina                                                    1,929.8         2,073.7         2,040.1 
         Aluminum products:
           Primary aluminum                                           327.9           355.6           271.7 
           Fabricated aluminum products                               400.0
           327.1           368.2 
                                                              --------------  --------------  --------------
            Total aluminum products                                   727.9           682.7           639.9 
                                                              ==============  ==============  ==============

        Average realized sales price:
         Alumina (per ton)                                    $         198   $         195   $         208 
         Primary aluminum (per pound)                                   .75             .69             .81 

        Net sales:
         Bauxite and alumina:
           Alumina                                            $       382.1   $       404.1   $       424.8 
           Other (2)(3)                                               106.5           103.9            89.4 
                                                              --------------  --------------  --------------
            Total bauxite and alumina                                 488.6           508.0           514.2 
                                                              --------------  --------------  --------------

         Aluminum processing:
           Primary aluminum                                           543.4           538.3           488.0 
           Fabricated aluminum products                             1,324.3         1,130.4         1,218.6 
           Other (3)                                                   16.9            13.8            17.0 
                                                              --------------  --------------  --------------
            Total aluminum processing                               1,884.6         1,682.5         1,723.6 
                                                              --------------  --------------  --------------

              Total net sales                                 $     2,373.2   $     2,190.5   $     2,237.8 
                                                              ==============  ==============  ==============

        Operating income (loss):
         Bauxite and alumina                                  $        20.0   $         1.1   $        54.0 
         Aluminum processing (4)                                      222.6           156.5           238.9 
         Corporate (4)                                                (74.6)          (59.8)          (82.3)
                                                              --------------  --------------  --------------
            Total operating income                            $       168.0   $        97.8   $       210.6 
                                                              ==============  ==============  ==============


        Net income                                            $        48.0   $         8.2   $        60.3 
                                                              ==============  ==============  ==============

        Capital expenditures                                  $       128.5   $       161.5   $        88.4 
                                                              ==============  ==============  ==============

        </TABLE>



        (1) All references to tons refer to metric tons of 2,204.6 pounds.
        (2) Includes net sales of bauxite.
        (3) Includes the portion of net sales attributable to minority
        interests in consolidated subsidiaries.
        (4) Includes pre-tax charges of $15.1 for the Aluminum processing
        segment and $4.6 for the Corporate segment recorded in the
        quarter ended June 30, 1997, related to restructuring of
        operations.



        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," "Recent Events and Developments,"
        "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. This section and the
        Company's Annual Report on Form 10-K each identify other factors
        that could cause such differences. No assurance can be given that
        these are all of the factors that could cause actual results to
        vary materially from the forward-looking statements.

        OVERVIEW

        The Company's operating results are sensitive to changes in prices
        of alumina, primary aluminum, and fabricated aluminum products, and
        also depend to a significant degree on the volume and mix of all
        products sold and on KACC's hedging strategies.  Primary aluminum
        prices have historically been subject to significant cyclical price
        fluctuations.  See Notes 1 and 10 of the Notes to Consolidated
        Financial Statements for a discussion of KACC's hedging activities.

        During the first eleven months of 1997, the Average Midwest United
        States transaction price ("AMT Price") for primary aluminum
        remained relatively stable generally in the $.75 - $.80 per pound
        range.  During December of 1997, the AMT Price fell to the $.70 -
        $.75 per pound range.  However, the average 1997 AMT Price compared
        favorably to the average 1996 AMT Price which remained fairly
        stable generally in the $.70 - $.75 range through June and then
        declined during the second half of the year, reaching a low of
        approximately $.65 per pound for October 1996, before recovering
        late in the year.  The AMT Price for 1995 was generally in the $.80
        - $.90 per pound range.  For the week ended February 20, 1998, the
        AMT Price was $.70 per pound.

        RECENT EVENTS AND DEVELOPMENTS

        The Company has previously disclosed that it set a goal of
        achieving $120.0 million of pre-tax cost reductions and other
        profit improvements, independent of metal price changes, with the
        full effect planned to be realized in 1998 and beyond, measured
        against 1996 results.  Management believes that recent operating
        performance has been at a rate which indicates that approximately
        half of the desired profit improvement was achieved at year-end
        1997 and that the remainder should be achieved in the second half
        of 1998.  However, there are inherent uncertainties regarding
        operating factors and economic and other external forces (such as
        the Valco power situation discussed below), many of which are
        outside management's direct control, and, as such, no assurances
        can be given that the desired benefit of profit improvements will
        be achieved.

        In addition to working to improve the performance of the Company's
        existing assets, the Company has expended significant efforts on
        analyzing its current asset portfolio with the intent of focusing
        its efforts and capital in sectors of the industry that are
        considered most attractive.  The initial steps of this process
        resulted in the Company recording a $19.7 million pre-tax
        restructuring charge during June 1997 related to the closing and
        rationalization of certain businesses and facilities. 
        Additionally, this process led to the Company's acquisition of the
        Bellwood aluminum extrusion plant in Richmond, Virginia.  See Notes
        3 and 4 of the Notes to Consolidated Financial Statements.

        As discussed more fully in Note 9 of the Notes to Consolidated
        Financial Statements, at December 31, 1997, there were
        approximately 77,400 claims pending against KACC pertaining to
        asbestos-related matters and the Company had accrued approximately
        $158.8 million related to the litigation and settlement of these
        claims and estimated future claims.  Subsequent to December 31,
        1997, KACC reached agreements settling approximately 25,000 of the
        pending asbestos-related claims. Also, subsequent to year-end 1997,
        KACC reached agreements on asbestos related coverage matters with
        two insurance carriers under which the Company will collect a total
        of approximately $17.5 million during the first quarter of 1998. 

        The insurance recoveries will reduce the approximately $134.0
        million of asbestos related receivable accrued at December 31,
        1997.  As the amounts related to the claim settlements and
        insurance recoveries were consistent with the Company's year-end
        1997 accrual assumptions, these events are not expected to have a
        material impact on the Company's financial position, results of
        operations or liquidity.

        The Company has previously disclosed that the Volta River Authority
        ("VRA") would partially reduce its electric power allocation to the
        Company's 90%-owned Volta Aluminium Company Limited ("Valco")
        smelter facility in Ghana in January 1998 and that Valco expected
        to operate approximately three potlines at the facility in 1998 as
        compared to the four potlines operated throughout 1997.  During
        February 1998, Valco and the VRA reached an agreement whereby Valco
        agreed to receive compensation in lieu of the power necessary to
        run one of the three remaining operating potlines, effective
        February 25, 1998.  Compensation under the agreement is expected to
        substantially offset the financial impact of the curtailment.  As
        previously disclosed Valco has notified the VRA that it believes it
        has  contractual  rights  to sufficient energy to run four and one-
        half potlines in 1998 and Valco continues to seek compensation from
        the VRA with respect to the January 1998, reduction of its power
        allocation.  Valco and the VRA also are in continuing discussions
        concerning other matters, including steps that might be taken to
        reduce the likelihood of such power curtailments beyond 1998.  No
        assurances can be given, however, as to the success of these
        discussions, the possibility of requests by the VRA for additional
        curtailments, or the operating level of Valco for the remainder of
        1998 or beyond.  Valco intends to pursue its legal rights in
        respect of reduced power allocation and compensation in respect of
        such reductions.

        RESULTS OF OPERATIONS

        1997 AS COMPARED TO 1996
        Summary - The Company reported net income of $48.0 million, or $.57
        per common share, for 1997 compared to net income of $8.2 million,
        or $.00 per common share, for 1996. Net sales in 1997 totaled
        $2,373.2 million compared to $2,190.5 million in 1996.

        Net income for 1997 includes the effect of certain non-recurring
        items, including a $19.7 million pre-tax restructuring charge
        (discussed above), an approximate $12.5 million non-cash tax
        benefit related to settlement of certain tax matters, and a $5.8
        million pre-tax charge related to additional litigation reserves.

        Bauxite and Alumina - Net segment sales decreased by 4% in 1997 as
        a 7% decline in alumina shipments more than offset a 2% increase in
        average realized alumina prices.  Shipment volumes were down as
        compared to 1996 as a result of the timing of shipments and a
        slight increase in internal transfers.  Segment operating income
        improved substantially from 1996 to 1997 despite the reduced level
        of shipments and certain increased costs in part resulting from a
        slowdown at the Company's 49%-owned Kaiser Jamaican Bauxite
        Company, prior to the signing of a new labor contract in December
        1997, primarily due to lower overall operating costs.

        Aluminum Processing - Net sales of primary aluminum in 1997
        approximated 1996 net sales figures as a 10% increase in average
        realized prices offset an 8% decrease in primary aluminum
        shipments.  Net sales of fabricated aluminum products for 1997 were
        up 17% as compared to 1996 as a 22% increase in shipments more than
        offset a 4% decrease in average realized prices.  The increase in
        fabricated aluminum product shipments over 1996 was primarily the
        result of the Company's June 1997 acquisition of an extrusion
        facility in Richmond, Virginia, and to a lesser extent the result
        of increased international shipments of can sheet and increased
        shipments of heat-treated products.

        The aluminum processing segment's operating income improved
        substantially in 1997 as a result of the increases in average
        realized prices for primary aluminum and shipments of fabricated
        aluminum product cited above.  Additionally, reduced power, raw
        material and supply costs and improved operating efficiencies also
        contributed to the improvement in segment operating income. 
        Included in the segment's operating income for the quarter and year
        ended December 31, 1997, was approximately $2.8 million and $10.3
        million of operating income realized during the periods, related to
        the settlement of certain energy service contract issues. 
        Operating income for the year ended December 31, 1997, also
        included a $15.1 million second quarter pre-tax charge resulting
        from the restructuring of operations.

        Corporate - Corporate operating expenses represent corporate
        general and administrative expenses which are not allocated to the
        Company's business segments.  Operating results for 1997 included a
        second quarter pre-tax charge of approximately $4.6 million
        associated with the Company's restructuring of operations. 
        Corporate operating expenses for the year ended December 31, 1997,
        also include consulting and other costs associated with the
        Company's ongoing profit improvement program and portfolio review
        initiatives.

        1996 AS COMPARED TO 1995
        Summary - For the year ended December 31, 1996, the Company's net
        income was $8.2 million, or $.00 per common share, compared to net
        income of $60.3 million, or $.69 per common share, in 1995.  Net
        sales for 1996 were $2,190.5 million, compared to $2,237.8 million
        in 1995.  Results for the year ended December 31, 1996, included an
        after tax benefit of approximately $17.0 million resulting from
        settlements of certain tax matters in December 1996.  Excluding the
        impact of these non-recurring items, the Company would have
        reported a net loss for the year ended December 31, 1996.

        Results for the year ended December 31, 1996, reflected the
        substantial reduction in market prices for primary aluminum more
        fully discussed above.  Alumina prices, which are significantly
        influenced by changes in primary aluminum prices, also declined
        from period to period.  The decrease in product prices more than
        offset the positive impact of increases in shipments in several
        segments of the Company's business, as more fully discussed below. 
        Results for 1996 also included approximately $20.5 million in
        research and development expenses and other costs related to the
        Company's new Micromill  facility as well as additional expenses
        related to other strategic initiatives.

        Results for 1995 included approximately $17.0 million of first
        quarter 1995 pre-tax expenses associated with an eight-day strike
        at five major U.S. locations, a six-day strike at the Company's 65%
        owned Alumina Partners of Jamaica ("Alpart") bauxite mining and
        alumina refinery in Jamaica, and a four-day disruption of alumina
        production at Alpart caused by a boiler failure.

        Bauxite and Alumina - Net segment sales for 1996 were basically
        unchanged from 1995 as a nominal decline in the average realized
        price of alumina was offset by a modest increase in alumina
        shipments.  The reduction in prices realized reflected the
        substantial decline in primary aluminum prices experienced in 1996
        discussed above.

        Operating income for this segment of the Company's business
        declined significantly from prior year periods as a result of
        reduced gross margins from alumina sales resulting from the
        previously discussed price declines and increased natural gas costs
        at the Company's Gramercy, Louisiana, alumina refinery.  Operating
        income for the year ended December 31, 1996, was also unfavorably
        impacted by high operating costs associated with disruptions in the
        power supply at the Company's Alpart alumina refinery during the
        first nine months of 1996, higher manufacturing costs resulting
        from higher market prices for fuel and caustic soda, and a
        temporary raw material quality problem experienced at the Company's
        Gramercy facility during the second quarter of 1996.

        Aluminum Processing - An increase in primary aluminum shipments in
        1996 of 31% more than offset a 15% decline in the average realized
        price for primary aluminum from period to period.  The increase in
        shipments during the year ended December 31, 1996, was the result
        of increased shipments of primary aluminum to third parties as a
        result of a decline in intracompany transfers.

        Net sales of fabricated aluminum products were down 7% for the year
        ended December 31, 1996, as compared to the prior year as a result
        of a decrease in shipments (primarily related to can sheet
        activities) resulting from reduced growth in demand and the
        reduction of customer inventories.  The impact of reduced product
        shipments was to a limited degree offset by a 4% increase in the
        average realized price from the sale of fabricated aluminum
        products, resulting primarily from a shift in product mix to higher
        value added products.

        Operating income for the aluminum processing segment for 1996 was
        also  impacted  by  approximately  $5.6  million  of scheduled non-
        recurring maintenance costs at the Company's Trentwood, Washington,
        rolling mill facility in the fourth quarter of 1996, offset by
        $11.5 million ($7.2 on an after-tax basis) of reduced operating
        costs resulting from the non-cash settlement in December 1996 of
        certain tax matters.

        Corporate - A substantial portion of the 1996 reduction in
        operating losses of the corporate segment as compared to 1995 was
        due to reduced incentive compensation accruals resulting from the
        decline in earnings from the prior year period.  Reduced post
        employment benefit plan and pension plan costs also contributed to
        the 1996 reduction.

        LIQUIDITY AND CAPITAL RESOURCES

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

        OPERATING ACTIVITIES
        Cash provided by operating activities was $45.0, $21.9 and $118.7
        million in 1997, 1996 and 1995, respectively.  The improvement in
        cash flows from operating activities between 1996 and 1997 was
        primarily due to higher earnings resulting from increased product
        prices and increased sales of fabricated products partially offset
        by increased investment in working capital.  The reduction in cash
        generated by operating activities from 1995 to 1996 was primarily
        due to lower earnings resulting from the reduction in prices
        realized by the Company from the sale of primary aluminum and
        alumina.

        At December 31, 1997, the Company had working capital of $451.5
        million, compared with working capital of $414.3 million at
        December 31, 1996.  The increase in working capital in 1997 was due
        primarily to an increase in Receivables, offset by a reduction in
        Cash and cash equivalents.

        INVESTING ACTIVITIES
        Total consolidated capital expenditures were $128.5, $161.5 and
        $88.4 million in 1997, 1996 and 1995, respectively (of which $6.6,
        $7.4, and $8.3 million were funded by the minority partners in
        certain foreign joint ventures in 1997, 1996, and 1995,
        respectively), and were made primarily to construct or acquire new
        facilities, improve production efficiency, reduce operating costs,
        and expand capacity at existing facilities.  Total consolidated
        capital expenditures are currently expected to be between $75.0 and
        $125.0 million per annum in each of 1998 through 2000 (of which
        approximately 8% is expected to be funded by the Company's minority
        partners in certain foreign joint ventures). 

        A substantial portion of the increase in capital expenditures in
        1996 over the 1995 level was attributable to the development and
        construction of the Company's proprietary Micromill(TM) technology for
        the production of can sheet and other sheet products from molten
        metal.  The first Micromill(TM) facility, which was constructed in
        Nevada during 1996 as a demonstration and production facility,
        remained in a start-up mode throughout 1997.  During January of
        1998, the facility commenced trial product shipments to customers. 
        The Company currently anticipates that commercial deliveries from
        the facility will commence during the first quarter of 1998. 
        However, the Micromill(TM) technology has not yet been fully
        implemented or commercialized and there can be no assurances that
        full implementation or commercialization will be successful.

        During October 1997, a joint decision was made by a KACC subsidiary
        and  its  joint venture partner to terminate and dissolve the Sino-
        foreign aluminum joint venture formed in 1995.  In January 1998,
        the KACC subsidiary reached an agreement to sell its interests in
        the venture to its partner.  The terms of the agreement are subject
        to certain governmental approvals by officials of the People's
        Republic of China.  This transaction will not have a material
        effect on the Company's results of operations or financial
        position.

        Management continues to evaluate numerous projects, all of which
        would require substantial capital, both in the United States and
        overseas.

        FINANCING ACTIVITIES AND LIQUIDITY
        The Company and KACC have a credit agreement (as amended, the
        "Credit Agreement") under which KACC is able to borrow by means of
        revolving credit advances and letters of credit (up to $125.0
        million) an aggregate amount equal to the lesser of $325.0 million
        or a borrowing base relating to eligible accounts receivable and
        eligible inventory.  During January 1998, the maturity of the
        Credit Agreement was extended from February 1999 to August 2001. 
        The Credit Agreement is guaranteed by the Company and by certain
        significant subsidiaries of KACC.  The Credit Agreement also
        requires KACC to maintain certain financial covenants, places
        significant restrictions on the Company and KACC and is secured by
        a substantial majority of the Company's and KACC's assets.  KACC's
        public indebtedness also include various restrictions and a
        repurchase obligation upon a Change of Control.  The Credit
        Agreement does not permit the Company or KACC to pay any dividends
        on their common stock.

        As of December 31, 1997, the Company's total consolidated
        indebtedness was $971.7 million, no amounts were outstanding under
        the revolving credit facility of the Credit Agreement, and after
        allowances for $51.6 million of outstanding letters of credit,
        $273.4 million of unused availability remained under the Credit
        Agreement.

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

        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 by MAXXAM and its subsidiaries.  See Note 8 of the Notes
        to Consolidated Financial Statements for a further description of
        the pledge agreements.

        During August 1997, the remaining 8,673,850 shares of outstanding
        PRIDES were converted into 7,227,848 shares of the Company's Common
        Stock pursuant to the PRIDES Certificate of Designations.  See Note
        8 of the Notes to Consolidated Financial Statements.

        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.

        See Note 8 of the Notes to Consolidated Financial Statements.

        ENVIRONMENTAL AND ASBESTOS 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 lawsuits 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 current evaluation of these and other environmental
        matters, the Company has established environmental accruals of
        $29.7 million at December 31, 1997.  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 $18.0 million.  The Company believes
        that KACC has insurance coverage available to recover certain
        incurred and future environmental costs and is actively pursuing
        claims in this regard.  However, no accruals have been made for any
        such insurance recoveries and no assurances can be given that the
        Company will be successful in its attempt to recover incurred or
        future costs.

        KACC is also 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 at least 20 years.  Based on
        past experience and reasonably anticipated future activity, the
        Company has established a $158.8 million accrual for estimated
        asbestos-related costs for claims filed and estimated to be filed
        through 2008, before consideration of insurance recoveries.  The
        Company, 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,
        believes that KACC has insurance coverage available to recover a
        substantial portion of its asbestos-related costs and that
        substantial insurance recoveries are probable.  Accordingly, the
        Company  has  recorded an estimated aggregate insurance recovery of
        $134.0  million  (determined  on  the  same  basis as the asbestos-
        related cost accrual) at December 31, 1997.  However, claims for
        recovery from some of KACC's insurance carriers are currently
        subject to pending litigation and other carriers have raised
        certain defenses, which have resulted in delays in recovering costs
        from the insurance carriers.

        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, results of operations, or liquidity.

        See note 9 of the Notes to Consolidated Financial Statements for a
        more detailed discussion of these contingencies and the factors
        affecting management's beliefs.  See also "Recent Events and
        Developments."

        OTHER MATTERS

        YEAR 2000
        The Company utilizes software and related technologies throughout
        its business that will be affected by the date change to the year
        2000.  An internal assessment has been undertaken to determine the
        scope and the related costs to assure that the Company's systems
        continue to function adequately to meet the Company's needs and
        objectives.  A detailed implementation plan is being developed from
        these findings.  Spending for related projects, which began in 1997
        and will likely continue through 1999, is currently expected to
        total in the $10 million to $15 million range.  System modification
        costs will be expensed as incurred.  Costs associated with new
        systems will be capitalized and amortized over the life of the
        product.

        RECENT ASIAN ECONOMIC DOWNTURN
        The Company has not experienced any significant direct financial,
        operating or other difficulties to date as a result of the recent
        Asian economic downturn.  Further, no significant direct impact is
        currently anticipated as direct sales to the region are relatively
        limited and the Company has taken steps to assure the
        creditworthiness of customers.  No assurance can be given, however,
        as to any possible indirect impact that the Asian economic downturn
        may have on the volume of shipments and prices on sales to
        customers outside the region.

        RECENT ACCOUNTING PRONOUNCEMENTS
        During June 1997, two new accounting standards were issued that
        will affect future financial reporting.  Statement of Financial
        Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
        No. 130"), requires the presentation of an additional income
        measure (termed "comprehensive income"), which adjusts traditional
        net income for certain items that previously were only reflected as
        direct charges to equity (such as minimum pension liabilities). 
        Statement of Financial Accounting Standards No. 131, Disclosures
        About Segments of an Enterprise and Related Information ("SFAS No.
        131"), requires that segment reporting for public reporting
        purposes be conformed to the segment reporting used by management
        for internal purposes.  SFAS No. 131 also adds a requirement for
        the presentation of certain segment data on a quarterly basis
        starting in 1999.  SFAS No. 130 and SFAS No. 131 must both be
        adopted in the Company's year-end 1998 reporting. Management is
        currently evaluating the impact of these two standards on the
        Company's future financial reporting.

        INCOME TAX MATTERS
        The Company's net deferred income tax assets as of December 31,
        1997, were $351.7 million, net of valuation allowances of $113.3
        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 6 of the
        Notes to Consolidated Financial Statements for a discussion of

        these and other income tax matters.


        KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

        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, 1997 and 1996, and the related
        statements of consolidated income (loss) and cash flows for each of
        the three years in the period ended December 31, 1997.  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 generally accepted
        auditing standards.  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, 1997 and
        1996, and the results of their operations and their cash flows for
        each of the three years in the period ended December 31, 1997, in
        conformity with generally accepted accounting principles.


        HOUSTON, TEXAS
        February 16, 1998



        KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
        C O N S O L I D A T E D  B A L A N C E  S H E E T S 

        
<TABLE>
        <CAPTION>
                                                                             December 31,
                                                                    ------------------------------
        (In millions of dollars, except share amounts)                        1997            1996
        ------------------------------------------------------------------------------------------
        <S>                                                         <C>             <C>
        ASSETS
        Current assets:
             Cash and cash equivalents                              $        15.8   $        81.3 
             Receivables:
                  Trade, less allowance for doubtful receivables of
                  $5.8 in 1997 and $4.7 in 1996                             232.9           177.9 
                  Other                                                     107.3            74.5 
             Inventories                                                    568.3           562.2 
             Prepaid expenses and other current assets                      121.3           127.8
                                                                    --------------  --------------

                  Total current assets                                    1,045.6         1,023.7 

        Investments in and advances to unconsolidated affiliates            148.6           168.4 
        Property, plant, and equipment - net                              1,171.8         1,168.7 
        Deferred income taxes                                               330.6           264.5 
        Other assets                                                        317.3           308.7 
                                                                    --------------  --------------
                  Total                                             $     3,013.9   $     2,934.0 
                                                                    ==============  ==============

        LIABILITIES AND STOCKHOLDERS' EQUITY
        Current liabilities:
             Accounts payable                                       $       176.2   $       189.7 
             Accrued interest                                                37.6            35.6 
             Accrued salaries, wages, and related expenses                   97.9            95.4 
             Accrued postretirement medical benefit obligation -
             current portion                                                 45.3            50.1 
             Other accrued liabilities                                      145.6           132.7 
             Payable to affiliates                                           82.7            97.0 
             Long-term debt - current portion                                 8.8             8.9 
                                                                    --------------  --------------
                  Total current liabilities                                 594.1           609.4 

        Long-term liabilities                                               491.9           458.1 
        Accrued postretirement medical benefit obligation                   720.3           722.5 
        Long-term debt                                                      962.9           953.0 
        Minority interests                                                  127.7           121.7 
        Commitments and contingencies
        Stockholders' equity:
             Preferred stock, par value $.05, authorized 20,000,000
             shares;
                  PRIDES Convertible, par value $.05, issued and
                       outstanding, 8,673,850 in 1996.                       -                 .4 
             Common stock, par value $.01, authorized 100,000,000
                  shares; issued and outstanding, 78,980,881 and
                  71,646,789 in 1997 and 1996                                  .8              .7 
             Additional capital                                             533.8           531.1 
             Accumulated deficit                                           (417.6)         (460.1)
             Additional minimum pension liability                            -               (2.8)
                                                                    --------------  --------------
                  Total stockholders' equity                                117.0            69.3 
                                                                    --------------  --------------

                  Total                                             $     3,013.9   $     2,934.0 
                                                                    ==============  ==============

        </TABLE>


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


        KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
        S T A T E M E N T S  O F  C O N S O L I D A T E D  I N C O M E 
        ( L O S S ) 

        
<TABLE>
        <CAPTION>
                                                                                Year Ended December 31,
                                                                    ----------------------------------------------

        (In millions of dollars, except share amounts)                        1997            1996            1995
        ----------------------------------------------------------------------------------------------------------
        <S>                                                         <C>             <C>             <C>
        Net sales                                                   $     2,373.2   $     2,190.5   $     2,237.8 
                                                                    --------------  --------------  --------------
        Costs and expenses:
             Cost of products sold                                        1,962.6         1,869.1         1,798.4 
             Depreciation                                                    91.1            96.0            94.3 
             Selling, administrative, research and development, and 
                  general                                                   131.8           127.6           134.5 
             Restructuring of operations                                     19.7            -               -
                                                                    --------------  --------------  --------------
                  Total costs and expenses                                2,205.2          2,092.7        2,027.2 
                                                                    --------------  --------------  --------------
        Operating income                                                    168.0            97.8           210.6 

        Other income (expense):
             Interest expense                                              (110.7)          (93.4)          (93.9)
             Other - net                                                      3.0            (2.7)          (14.1)
                                                                    --------------  --------------  --------------

        Income before income taxes and minority interests                    60.3             1.7           102.6 

        (Provision) credit for income taxes                                  (8.8)            9.3           (37.2)

        Minority interests                                                   (3.5)           (2.8)           (5.1)
                                                                    --------------  --------------  --------------

        Net income                                                           48.0             8.2            60.3 


        Dividends on preferred stock                                         (5.5)           (8.4)          (17.6)
                                                                    --------------  --------------  --------------

        Net income (loss) available to common shareholders          $        42.5   $        (0.2)  $        42.7 
                                                                    ==============  ==============  ==============

        Earnings per common share:
             Basic                                                  $         .57   $         .00   $         .69 
                                                                    ==============  ==============  ==============
             Diluted                                                $         .57   $         .00   $         .69 
                                                                    ==============  ==============  ==============

        Weighted average common shares outstanding (000):
             Basic                                                         74,221          71,644          62,000 
                                                                    ==============  ==============  ==============


             Diluted                                                       74,382          71,644          62,264 
                                                                    ==============  ==============  ==============

        </TABLE>


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


        KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
        S T A T E M E N T S  O F  C O N S O L I D A T E D  C A S H  F L O W S 

        
<TABLE>
        <CAPTION>
                                                                           Year Ended December 31,
                                                               ----------------------------------------------
        (In millions of dollars)                                         1997            1996            1995
        -----------------------------------------------------------------------------------------------------
        <S>                                                    <C>             <C>             <C>

        Cash flows from operating activities:
             Net income                                        $        48.0   $         8.2   $        60.3 
             Adjustments to reconcile net income to net cash
                  provided by operating activities:
                       Depreciation                                     91.1            96.0            94.3 
                       Restructuring of operations                      19.7            -               -
                       Non-cash benefit for income taxes               (12.5)           -               -
                       Amortization of excess investment over           11.4            11.6            11.4 
                            equity in unconsolidated affiliates

                       Amortization of deferred financing costs          6.1             5.6             5.4 
                            and net discount on long-term debt
                       Undistributed equity in (income) losses
                            of unconsolidated affiliates, net            7.8             3.0           (19.2)
                            of distributions
                       Minority interests                                3.5             2.8             5.1 
                       (Increase) decrease in receivables              (85.9)           51.8          (109.7)
                       Increase in inventories                          (9.3)          (36.5)          (57.7)
                       Decrease (increase) in prepaid expenses           1.6           (39.5)           82.9 
                            and other assets
                       (Decrease) increase in accounts payable         (13.5)            5.2            32.4 
                       Increase (decrease) in accrued interest           2.0             3.6             (.6)
                       (Decrease) increase in payable to               (19.6)          (62.9)           10.6 
                            affiliates and accrued liabilities
                       Decrease in accrued and deferred income         (17.4)          (36.5)           (7.4)
                            taxes
                       Other                                            12.0             9.5            10.9 
                                                               --------------  --------------  --------------

                            Net cash provided by operating
                                 activities                             45.0            21.9           118.7 
                                                               --------------  --------------  -------------- 

        Cash flows from investing activities:
             Additions to property, plant, and equipment              (128.5)         (161.5)          (88.4)
             Other                                                      19.9            17.2             8.6 
                                                               --------------  --------------  --------------

                            Net cash used for investing
                                 activities                           (108.6)         (144.3)          (79.8)
                                                               --------------  --------------  --------------


        Cash flows from financing activities:
             Borrowings (repayments) under revolving credit             -              (13.1)            6.4 
                  facility, net
             Borrowings of long-term debt                               19.0           225.9            -
             Repayments of long-term debt                               (8.8)           (9.0)          (11.8)
             Incurrence of financing costs                               (.9)           (6.2)            (.8)
             Dividends paid                                             (4.2)          (10.5)          (20.8)
             Capital stock issued                                         .4            -                1.2 
             Increase in restricted cash, net                           (5.3)           -               -
             Redemption of minority interests' preference stock         (2.1)           (5.3)           (8.8)

                                                               --------------  --------------  --------------
                            Net cash (used for) provided by
                                 financing activities                   (1.9)          181.8           (34.6)
                                                               --------------  --------------  --------------

        Net (decrease) increase in Cash and cash equivalents           (65.5)           59.4             4.3 
             during the year
        Cash and cash equivalents at beginning of year                  81.3            21.9            17.6 

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

        Cash and cash equivalents at end of year               $        15.8   $        81.3   $        21.9 
                                                               ==============  ==============  ==============

        Supplemental disclosure of cash flow information:
             Interest paid, net of capitalized interest        $       102.7   $        84.2   $        88.8 
             Income taxes paid                                          24.4             22.7           35.7 
             Tax allocation payments to MAXXAM Inc.                     11.8             1.1            -

        </TABLE>



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


KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(In millions of dollars, except share amounts)



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 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 11).

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.

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

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. 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:


<TABLE>
<CAPTION>
                                                                December 31,
                                                       ------------------------------
                                                                 1997            1996
- -------------------------------------------------------------------------------------
<S>                                                    <C>             <C>
Finished fabricated products                           $        103.9  $        113.5
Primary aluminum and work in process                            226.6           200.3
Bauxite and alumina                                             108.4           110.2
Operating supplies and repair and maintenance parts             129.4           138.2
                                                       --------------  --------------
                                                       $        568.3  $        562.2
                                                       ==============  ==============

</TABLE>


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 stock options granted in 1997 were
at the market price.  No stock options were granted in 1996 or 1995.  (See
Note 7).

OTHER INCOME (EXPENSE)
Other expense in 1997, 1996, and 1995 includes $8.8, $3.1, and $17.8 of
pre-tax charges related principally to establishing
additional: (i) litigation reserves for asbestos claims, net of estimated
aggregate insurance recoveries, and (ii) environmental
reserves for potential soil and ground water remediation matters, each
pertaining to operations which were discontinued prior to
the acquisition of the Company by MAXXAM in 1988.

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 receive the amount (if any) by which the price at
the settlement date exceeds the strike price.  Any interim fluctuations in
prices prior to the settlement date are deferred until
the settlement date of the underlying hedged transaction, at which point
they are reflected in net sales or cost of sales (as
applicable) together with the related premium cost.  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.  No accounting
recognition is accorded to interim fluctuations in prices of forward sales
contracts.

KACC has established margin accounts and credit limits with certain
counterparties related to open forward sales and option
contracts.  When unrealized gains or losses are in excess of such credit
limits, KACC is entitled to receive advances from the
counterparties on open positions or is required to make margin deposits to
counterparties, as the case may be.  At December 31,
1997, KACC had neither received nor made any margin deposits.  At December
31, 1996, KACC had received $13.0 of margin advances
from counterparties.  Management considers credit risk related to possible
failure of the counterparties to perform their
obligations pursuant to the derivative contracts to be minimal.

Deferred gains or losses as of December 31, 1997, are included in Prepaid
expenses and other current assets and Other accrued
liabilities (See Note 10).

FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company estimates the fair value of its outstanding indebtedness to be
$1,020.0 and $1,007.0 at December 31, 1997, and 1996,
respectively, based on quoted market prices for KACC's 9-7/8% Senior Notes
due 2002 (the "9-7/8% Notes"), 12-3/4% Senior
Subordinated Notes due 2003 (the "12-3/4% Notes"), and 10-7/8% Senior Notes
due 2006 (the "10-7/8% 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.

EARNINGS (LOSS) PER SHARE
In the fourth quarter of 1997 the Company adopted Statement of Financial
Accounting standards No. 128, Earnings Per Share ("SFAS
No. 128") which, among other things, requires the presentation of "Basic"
and "Diluted" earnings per share in lieu of "Primary"
and "Fully Diluted" earnings per share.  Basic differs from Primary
earnings per share in that it only includes the weighted
average impact of outstanding shares of the Company's Common Stock (i.e.,
it excludes common stock equivalents and the dilutive
effect of stock options, etc.).  Diluted earnings per share is
substantially similar to Fully diluted earnings per share as
previously reported.  In accordance with the provision of SFAS No. 128, all
earnings per share data for prior periods has been
restated to conform to the new computation and presentation guidelines of
SFAS No. 128.  However, such restatement did not have a
significant impact on earnings per share amounts previously reported for
any recent prior period.

Basic - Earnings (loss) per share is computed by deducting preferred stock
dividends from net income (loss) in order to determine
net income (loss) available to common share holders.  This amount is then
divided by 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 - Diluted earnings per share for the years ended December 31, 1997,
and 1995 include the dilutive effect of outstanding
stock options (161,000 and 264,000 shares, respectively).  The impact of
outstanding stock options was excluded from the
computation for the year ended December 31, 1996, as its effect would have
been antidilutive.  The Company's 8.255% PRIDES,
Convertible Preferred Stock ("PRIDES") have not been treated "as if"
converted for purposes of the Diluted computation in any
period presented as such treatment would have been antidilutive.  The
Company's Mandatory Conversion Premium Dividend Preferred Stock was not
treated "as if" converted in the Diluted computation for the year ended
December 31, 1995, because such treatment
would have been antidilutive.

2.   INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

Summary 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 earnings (losses) before income taxes
of such operations is treated as a reduction (increase) in cost of products
sold.  At December 31, 1997, and 1996, KACC's net receivables from these
affiliates were not material.

The summary combined financial information for the year ended December 31,
1997, also contains the balances and results of AKW L.P. (50% owned), an
aluminum wheels joint venture formed with a third party during May 1997. 
(See Note 4)

SUMMARY OF COMBINED FINANCIAL POSITION


<TABLE>
<CAPTION>
                                                                December 31,
                                                       ------------------------------
                                                                 1997            1996
- -------------------------------------------------------------------------------------
<S>                                                    <C>             <C>
Current assets                                         $        393.0  $        450.3
Long-term assets (primarily property, plant, and                395.0           364.7
     equipment, net)                                   --------------  --------------
     Total assets                                      $        788.0  $        815.0
                                                       ==============  ==============
Current liabilities                                    $        117.1  $        116.9
Long-term liabilities (primarily long-term debt)                400.8           386.7
Stockholders' equity                                            270.1           311.4
                                                       --------------  --------------
     Total liabilities and stockholders' equity        $        788.0  $        815.0
                                                       ==============  ==============


</TABLE>


SUMMARY OF COMBINED OPERATIONS


<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                  ----------------------------------------------
                                                            1997            1996            1995
- ------------------------------------------------------------------------------------------------
<S>                                               <C>             <C>             <C>
Net sales                                         $       644.1   $       660.5   $       685.9 
Costs and expenses                                       (637.8)         (631.5)         (618.7)
Provision for income taxes                                 (8.2)           (8.7)          (18.7)
                                                  --------------  --------------  --------------

Net income (loss)                                 $        (1.9)  $        20.3   $        48.5 
                                                  ==============  ==============  ==============

Company's equity in income (loss)                 $         2.9   $         8.8   $        19.2 
                                                  ==============  ==============  ==============

Dividends received                                $        10.7   $        11.8   $       -
                                                  ==============  ==============  ==============

</TABLE>


The Company's equity in income (loss) differs from the summary net income
(loss) due to various percentage ownerships in the entities and equity
method accounting adjustments. At December 31, 1997, KACC's investment in
its unconsolidated affiliates exceeded its equity in their net assets by
approximately $28.8 which amount will be fully amortized over the next
three years.

The Company and its affiliates have interrelated operations. KACC provides
some of its affiliates with services such as financing, management, and
engineering. Significant activities with affiliates include the acquisition
and processing of bauxite, alumina, and primary aluminum. Purchases from
these affiliates were $245.2, $281.6, and $284.4 in the years ended
December 31, 1997, 1996, and 1995, respectively.

3.   PROPERTY, PLANT, AND EQUIPMENT

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


<TABLE>
<CAPTION>
                                                                December 31,
                                                       ------------------------------
                                                                 1997            1996
- -------------------------------------------------------------------------------------
<S>                                                    <C>             <C>
Land and improvements                                  $       163.9   $       157.5 
Buildings                                                      228.3           216.0 
Machinery and equipment                                      1,529.1         1,441.1 

Construction in progress                                        51.2            84.7 
                                                       --------------  --------------
                                                             1,972.5         1,899.3 
Accumulated depreciation                                      (800.7)         (730.6)
                                                       --------------  --------------
     Property, plant, and equipment, net               $     1,171.8   $     1,168.7 
                                                       ==============  ==============


</TABLE>


During June 1997, Kaiser Bellwood Corporation, a newly formed, wholly owned
subsidiary of KACC, completed the acquisition of
Reynolds Metals Company's Richmond, Virginia, extrusion plant and its
existing inventories for a total purchase price of $41.6,
consisting of cash payments of $38.4 and the assumption of approximately
$3.2 of employee related and other liabilities.  Upon
completion of the transaction, Kaiser Bellwood Corporation became a
subsidiary guarantor under the indentures in respect of the
9-7/8% Notes, 10-7/8% Notes, and the 12-3/4% Notes. (See Note 5).

4.   RESTRUCTURING OF OPERATIONS

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

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

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

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

5.   LONG-TERM DEBT

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


<TABLE>
<CAPTION>
                                                                                                           December 31,
                                                                                                2003  ----------------------
                                                                                                 and        1997        1996
                                    1998        1999        2000        2001        2002       After       Total       Total
- ----------------------------------------------------------------------------------------------------------------------------
<S>                           <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
Credit Agreement                                                                                            -           -
9-7/8% Senior Notes due 2002,                                                  $    224.2  $     -     $    224.2  $    224.0
     net
10-7/8% Senior Notes due 2006,                                                                  225.8       225.8       225.9
     net
12-3/4% Senior Subordinated                                                                     400.0       400.0       400.0
     Notes due 2003
Alpart CARIFA Loans - (fixed
     and variable rates)                                                                        60.0        60.0        60.0
     due 2007, 2008
Other borrowings (fixed and   $      8.8  $       .4  $       .3  $       .3          .3        51.6        61.7        52.0
     variable rates)          ----------  ----------  ----------  ----------  ----------  ----------  ----------  ----------

Total                         $      8.8  $       .4  $       .3  $       .3  $    224.5  $    737.4       971.7       961.9
                              ==========  ==========  ==========  ==========  ==========  ==========

Less current portion                                                                                         8.8         8.9
                                                                                                      ----------  ----------

     Long-term debt                                                                                   $    962.9  $    953.0
                                                                                                      ==========  ==========

</TABLE>


CREDIT AGREEMENT
In February 1994, the Company and KACC entered into a credit agreement (as
amended, the "Credit Agreement") which provides a
$325.0 five-year secured, revolving line of credit.  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 $325.0 or a borrowing base relating to
eligible accounts receivable and eligible inventory.  As of December 31,
1997, $273.4 (of which $73.4 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 premium (which varies
based on the results of a financial test) over either a base rate or LIBOR,
at the Company's option.

In January 1998, the term of the Credit Agreement was extended from
February 1999 to August 2001.

LOAN 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 and Nevada Micromill(TM) facility); (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 9-7/8% Notes, its 10-7/8% Notes
and its 12-3/4% Notes are guaranteed, jointly and
severally, by certain subsidiaries of KACC.  The indentures governing the
9-7/8% Notes, the 10-7/8% 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 9-7/8% Notes, the 10-7/8%
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.

Under the most restrictive of the covenants in the Credit Agreement,
neither the Company nor KACC currently is permitted to pay
dividends on its common stock.

In December 1991, Alpart entered into a loan agreement with the Caribbean
Basin Projects Financing Authority ("CARIFA").  Alpart's
obligations under the loan agreement are secured by a $64.2 letter of
credit guaranteed by the partners in Alpart (of which $22.5
is guaranteed by the Company's minority partner 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.

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 $121.9 and $56.1 at
December 31, 1997 and 1996, respectively.

CAPITALIZED INTEREST
Interest capitalized in 1997, 1996, and 1995 was $6.6, $4.9, and $2.8,
respectively.

6.   INCOME TAXES

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


<TABLE>
<CAPTION>
                                                         Year Ended December 31,
                                             ----------------------------------------------
                                                       1997            1996            1995
- -------------------------------------------------------------------------------------------
<S>                                          <C>             <C>             <C>
Domestic                                     $      (112.6)  $       (45.8)  $       (55.9)
Foreign                                              172.9            47.5           158.5 
                                             --------------  --------------  --------------
     Total                                   $        60.3   $         1.7   $       102.6 
                                             ==============  ==============  ==============

</TABLE>


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) credit for income taxes on income (loss) before income
taxes and minority interests consists of:


<TABLE>
<CAPTION>
                                          Federal         Foreign           State           Total
- -------------------------------------------------------------------------------------------------
<S>                                <C>             <C>             <C>             <C>
1997      Current                  $        (2.0)  $       (28.7)  $         (.2)  $       (30.9)
          Deferred                          30.5            (7.0)           (1.4)           22.1 
                                   --------------  --------------  --------------  --------------
               Total               $        28.5   $       (35.7)  $        (1.6)  $        (8.8)
                                   ==============  ==============  ==============  ==============

1996      Current                  $        (1.6)  $       (21.8)  $         (.1)  $       (23.5)
          Deferred                           8.6             7.6            16.6            32.8 
                                   --------------  --------------  --------------  --------------
               Total               $         7.0   $       (14.2)  $        16.5   $         9.3 
                                   ==============  ==============  ==============  ==============

1995      Current                  $        (4.3)  $       (40.2)  $         (.1)  $       (44.6)
          Deferred                          15.2            (4.9)           (2.9)            7.4 
                                   --------------  --------------  --------------  --------------
               Total               $        10.9   $       (45.1)  $        (3.0)  $       (37.2)
                                   ==============  ==============  ==============  ==============

</TABLE>


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


<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                  ----------------------------------------------
                                                            1997            1996            1995
- ------------------------------------------------------------------------------------------------
<S>                                               <C>             <C>             <C>

Amount of federal income tax provision based on   $       (21.1)  $         (.6)  $       (35.9)
     the statutory rate
Revision of prior years' tax estimates and other           12.5            10.0             1.5 
     changes in valuation allowances
Percentage depletion                                        4.2             3.9             4.2 
Foreign taxes, net of federal tax benefit                  (3.1)           (5.5)           (5.4)
Other                                                      (1.3)            1.5            (1.6)
                                                  --------------  --------------  --------------
(Provision) credit for income taxes               $        (8.8)  $         9.3   $       (37.2)
                                                  ==============  ==============  ==============


</TABLE>


Included in revision of prior years' tax estimates and other changes in
valuation allowances for 1997 and 1996 shown above are
$12.5 and $9.8 related to the resolution of certain income tax matters in
the second quarter of 1997 and fourth quarter of 1996,
respectively.

The components of the Company's net deferred income tax assets are as
follows:


<TABLE>
<CAPTION>
                                                               December 31,
                                                      ------------------------------
                                                                1997            1996
- ----------------------------------------------------- ------------------------------
<S>                                                   <C>             <C>
Deferred income tax assets:

     Postretirement benefits other than pensions      $       288.9   $       290.5 
     Loss and credit carryforwards                             99.3           135.1 
     Other liabilities                                        169.3           157.6 
     Other                                                    102.0            86.7 
     Valuation allowances                                    (113.3)         (127.2)
                                                      --------------  --------------
          Total deferred income tax assets-net                546.2           542.7 
                                                      --------------  --------------

Deferred income tax liabilities:
     Property, plant, and equipment                          (139.7)         (160.9)
     Other                                                    (54.8)          (72.6)
                                                      --------------  --------------
          Total deferred income tax liabilities              (194.5)         (233.5)
                                                      --------------  --------------

Net deferred income tax assets                        $       351.7   $       309.2 
                                                      ==============  ==============
</TABLE>


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
in any year subsequent to 1997, the Company has the ability to carry
forward such loss for 20 taxable years.  For these reasons,
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, 1997 and 1996, $53.7 and $69.7, respectively, of the net
deferred income tax assets listed above are included
on 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 on 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.  During 1997 MAXXAM reached a settlement with the Internal Revenue
Service regarding all remaining years where the Company
and its subsidiaries were included in the MAXXAM consolidated federal
income tax returns.  As a result of this settlement, KACC
paid $11.8 to MAXXAM in respect of its liabilities pursuant to its tax
allocation agreement with MAXXAM.  Payments or refunds for
periods prior to July 1, 1993, related to other 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. 
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.

At December 31, 1997, 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 $33.2 and $10.4, respectively,
which expire periodically through 2011, foreign tax credit ("FTC")
carryforwards of $50.0, which expire periodically through 2002,
and alternative minimum tax ("AMT") credit carryforwards of $21.6, which
have an indefinite life.  The Company also has AMT net
operating loss and FTC carryforwards of $17.6 and $74.7, respectively,
available, subject to certain limitations, to offset future
alternative minimum taxable income, which expire periodically through 2011
and 2002, respectively.

7.   EMPLOYEE BENEFIT AND INCENTIVE PLANS

RETIREMENT PLANS
Retirement plans are non-contributory for salaried and hourly employees and
generally provide for benefits based on a formula
which considers length of service and earnings during years of service. 
The Company's funding policies meet or exceed all
regulatory requirements.

The funded status of the employee pension benefit plans and the
corresponding amounts that are included in the Company's
Consolidated Balance Sheets are as follows:


<TABLE>
<CAPTION>
                                                                Plans with Accumulated
                                                                  Benefits Exceeding
                                                                      Assets(1)
                                                                     December 31,
                                                            -----------------------------
                                                                      1997            1996
- ----------------------------------------------------------- ------------- - -------------
<S>                                                         <C>             <C>
Accumulated benefit obligation:
     Vested employees                                       $       785.4   $       737.7 
     Nonvested employees                                             41.2            38.5 
                                                            -------------   -------------
     Accumulated benefit obligation                                 826.6           776.2 
Additional amounts related to projected salary increases             46.4            40.0 
                                                            -------------   -------------
Projected benefit obligation                                        873.0           816.2 
Plan assets (principally common stocks and fixed income
     obligations) at fair value                                    (756.9)         (662.0)
                                                            -------------   -------------
Plan assets less than projected benefit obligation                  116.1           154.2 
Unrecognized net gains (losses)                                        .3           (13.6)
Unrecognized net obligations                                          (.3)            (.4)
Unrecognized prior-service cost                                     (22.2)          (26.9)
Adjustment required to recognize minimum liability                    5.4            13.7 
                                                            -------------   -------------
Accrued pension obligation included in the Consolidated
     Balance Sheets (principally in Long-term liabilities)  $        99.3   $       127.0 
                                                            =============   =============

</TABLE>


(1)  Includes accrued pension obligations of approximately $6.3 and $.3 in
1997 and 1996, respectively, related to plans with assets exceeding
accumulated benefits.

As required by Statement of Financial Accounting Standards No. 87,
Employers' Accounting for Pensions, the Company recorded after-tax credits
to equity of $2.8 and $11.0 at December 31, 1997 and 1996, respectively, to
reduce the deficit of the minimum liability over the unrecognized net
obligation and prior-service cost.  These amounts were recorded net of the
related income tax provision of $1.3 and $6.5 as of December 31, 1997 and
1996, respectively, which approximated the federal and state statutory
rates.

The components of net periodic pension cost are:


<TABLE>
<CAPTION>
                                                                   Year Ended December 31,
                                                       ----------------------------------------------
                                                                 1997            1996            1995
- -----------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>             <C>
Service cost - benefits earned during the period       $        13.4   $        12.9   $        10.0 
Interest cost on projected benefit obligation                   61.6            60.0            59.8 
Return on assets:
     Actual gain                                              (129.9)          (89.8)         (112.2)
     Deferred gain                                              68.1            34.8            64.6 
Net amortization and deferral                                    6.0             5.5             4.2 
                                                       --------------  --------------  --------------
Net periodic pension cost                              $        19.2   $        23.4   $        26.4 
                                                       ==============  ==============  ==============

</TABLE>


Assumptions used to value obligations at year-end, and to determine the net
periodic pension cost in the subsequent year are:


<TABLE>
<CAPTION>
                                                            1997            1996            1995
- ------------------------------------------------------------------------------------------------
<S>                                               <C>             <C>             <C>
Discount rate                                              7.25%           7.75%            7.5%
Expected long-term rate of return on assets                 9.5%            9.5%            9.5%
Rate of increase in compensation levels                     5.0%            5.0%            5.0%

</TABLE>


POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
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.

The Company's accrued postretirement benefit obligation is composed of the
following:


<TABLE>
<CAPTION>
                                                                     December 31,
                                                            ------------------------------
                                                                      1997            1996
- ------------------------------------------------------------------------------------------
<S>                                                         <C>             <C>
Accumulated postretirement benefit obligation:
     Retirees                                               $        446.7  $        498.7
     Active employees eligible for postretirement benefits            35.1            36.7
     Active employees not eligible for postretirement                 62.7            67.4
          benefits                                          --------------  --------------

     Accumulated postretirement benefit obligation                   544.5           602.8
Unrecognized net gains                                               135.0            71.3
Unrecognized gains related to prior-service costs                     86.1            98.5
                                                            --------------  --------------
Accrued postretirement benefit obligation                   $        765.6  $        772.6
                                                            ==============  ==============

</TABLE>


The components of net periodic postretirement benefit cost are:


<TABLE>
<CAPTION>
                                                                   Year Ended December 31,
                                                       ----------------------------------------------
                                                                 1997            1996            1995
- -----------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>             <C>
Service cost                                           $         6.1   $         3.8   $         4.5 
Interest cost                                                   43.9            46.9            52.3 
Amortization of prior service cost                             (12.4)          (12.4)           (8.9)
                                                       --------------  --------------  --------------
Net periodic postretirement benefit cost               $        37.6   $        38.3   $        47.9 
                                                       ==============  ==============  ==============

</TABLE>


In 1997 annual assumed rates of increase in the per capita cost of covered
benefits (i.e., health care cost trend rate) for non-HMO are 7.5% and 5.5%
for retirees under 65 and over 65, respectively, and 4.0% for HMO at all
ages.  Non-HMO rates are assumed to decrease gradually to 5.35% in 2007
and remain at that level thereafter. The health care cost trend rate has
a significant effect on the amounts reported.  A one percentage point
increase in the assumed health care cost trend rate would increase the
accumulated postretirement benefit obligation as of December 31, 1997, by
approximately $53.0 and the aggregate of the service and
interest cost components of net periodic postretirement benefit cost for
1997 by approximately $6.0.  The weighted average
discount rate  used to determine the accumulated postretirement benefit
obligation at December 31, 1997 and 1996, was 7.25% and
7.75%, respectively.

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 $8.3, $(2.1) and $11.9 for the
years ended December 31, 1997, 1996 and 1995, respectively.

The Company has a total of 5,500,000 shares of Common Stock reserved for
grant under its incentive compensation programs.  At
December 31, 1997, 3,536,653 shares of Common Stock remained available for
grant after consideration of the 3,000,000 share
increase in available shares, approved by shareholders in May 1997, and
current year share grants and stock option activity. 
Stock options granted pursuant to the Company's nonqualified stock option
program are granted at the prevailing market price,
generally vest at a rate of 20 - 33% per year, and have a 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.


<TABLE>
<CAPTION>
                                                                 1997            1996            1995
- -----------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>             <C>
Outstanding at beginning of year ($10.33, $10.32 and         890,395         926,085       1,119,680 
     $9.85)
Granted ($10.06)                                              15,092            -               -
Exercised ($8.33, $8.99, and $7.32)                          (48,410)         (8,275)       (155,500)
Expired or forfeited ($10.12, $10.45, and $8.88)             (37,325)        (27,415)        (38,095)
                                                       --------------  --------------  --------------
Outstanding at end of year ($10.45, $10.33, and              819,752         890,395         926,085 
     $10.32)                                           ==============  ==============  ==============

Exercisable at end of year ($10.53, $10.47, and              601,115         436,195         211,755 
     $10.73)                                           ==============  ==============  ==============

</TABLE>



In accordance with Statement of Financial Accounting Standards No. 123,
Accounting for Stock Based Compensation ("SFAS No. 123"),
the Company is required to calculate pro forma compensation cost for all
stock options granted subsequent to December 31, 1994. 
No stock options were granted during 1995 and 1996.  However, as shown in
the table above, 15,092 options were granted in 1997
which would be subject to the pro forma calculation requirements.  For SFAS
No. 123 purposes, the fair value of the 1997 stock
option grant was estimated using the Black-Scholes option pricing model. 
The estimated fair value of the 1997 stock options
grants of $.1 would result in increased pro forma compensation expense and
therefore reduced net income.

8.   STOCKHOLDER'S EQUITY AND MINORITY INTERESTS

Changes in stockholders' equity and minority interests were:


<TABLE>
<CAPTION>
                                Minority Interests                      Stockholders' Equity
                              ---------------------   -------------------------------------------------------
                                                                                                   Additional
                                Redeemable                                                   Accu     Minimum
                                Preference             Preferred    Common Additional     mulated     Pension
                                     Stock     Other       Stock     Stock    Capital     Deficit   Liability
- --------------------------------------------------- ---------------------------------------------------------

<S>                             <C>         <C>       <C>         <C>      <C>         <C>         <C>
BALANCE, DECEMBER 31, 1994          $ 29.1  $  87.1       $   .6  $    .6  $   527.8   $  (502.6)  $    (9.1)
     Net income                                                                             60.3 
     Redeemable preference
          stock:
          Accretion                   3.9 
          Stock redemption           (8.7)
          Stock repurchase            5.4 
     Conversions (1,222
          preference shares
          into cash)                            (.1)
     Common stock issued upon
          redemption and
          conversion of
          preferred stock                                   (.2)       .1        1.1 
     Dividends on preferred
          stock                                                                            (17.6)
     Minority interests                         6.0 
     Incentive plans
          accretion                                                              1.4 
     Additional minimum                                                                                 (4.7)
          pension liability     ----------  -------   ----------  -------  ----------  ----------  ----------
BALANCE, DECEMBER 31, 1995           29.7      93.0          .4        .7      530.3      (459.9)      (13.8)
     Net income                                                                              8.2 
     Redeemable preference
          stock:
          Accretion                   3.1 
          Stock redemption           (5.3)
     Common stock issued upon
          redemption and
          conversion of
          preferred stock                                                         .1 
     Dividends on preferred
          stock                                                                             (8.4)
     Minority interests                         1.2 
     Incentive plan accretion                                                     .7 
     Reduction of minimum
          pension liability                                                                             11.0 
                                ----------  -------   ----------  -------  ----------  ----------  ----------
BALANCE, DECEMBER 31, 1996           27.5      94.2          .4        .7      531.1      (460.1)       (2.8)
     Net income                                                                             48.0 
     Redeemable preference
          stock:
          Accretion                   2.3 
          Stock redemption           (2.1)
     Common stock issued upon
          redemption and
          conversion of
          preferred stock                                   (.4)       .1        1.7 
     Stock options exercised                                                      .4 
     Dividends on preferred
          stock                                                                             (5.5)
     Minority interests                         5.8 
     Incentive plan accretion                                                     .6 
     Reduction of minimum
          pension liability                                                                              2.8 
                                ----------  -------   ----------  -------  ----------  ----------  ----------
BALANCE, DECEMBER 31, 1997      $    27.7   $ 100.0   $     -     $    .8  $   533.8   $  (417.6)  $     -
                                ==========  =======   ==========  =======  ==========  ==========  ==========


</TABLE>



REDEEMABLE PREFERENCE STOCK
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.  Holders of
the Redeemable Preference Stock are entitled to an annual cash dividend of
$5 per share, or an amount based on a formula tied to
KACC's pre-tax income from aluminum operations, when and as declared by the
Board of Directors.

The carrying values of the Redeemable Preference Stock are increased each
year to recognize accretion between the fair value (at
which the Redeemable Preference Stock was originally issued) and the
redemption value.  Changes in Redeemable Preference Stock are
shown below.


<TABLE>
<CAPTION>
                                                           1997            1996            1995
- -----------------------------------------------------------------------------------------------
<S>                                               <C>            <C>             <C>
Shares:
     Beginning of year                                 634,684         737,363         912,167 
     Redeemed                                          (39,631)       (102,679)       (174,804)
                                                  -------------  --------------  --------------
     End of year                                       595,053         634,684         737,363 
                                                  =============  ==============  ==============

</TABLE>


Redemption fund agreements require KACC to make annual payments by March 31
of the subsequent year based on a formula tied to
consolidated net income until the redemption funds are sufficient to redeem
all of the Redeemable Preference Stock.  On an annual
basis, the minimum payment is $4.3 and the maximum payment is $7.3.  KACC
also has certain additional repurchase requirements
which are, among other things, based upon profitability tests.

The Redeemable Preference Stock is entitled to the same voting rights as
KACC common stock and to certain additional voting rights
under certain circumstances, including the right to elect, along with other
KACC preference stockholders, two directors whenever
accrued dividends have not been paid on two annual dividend payment dates
or when accrued dividends in an amount equivalent to six
full quarterly dividends are in arrears.  The Redeemable Preference Stock
restricts the ability of KACC to redeem or pay dividends
on common stock if KACC is in default on any dividends payable on
Redeemable Preference Stock.

PREFERENCE STOCK
KACC has four series of $100 par value Cumulative Convertible Preference
Stock ("$100 Preference Stock") with annual dividend
requirements of between 4-1/8% and 4-3/4%.  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, 1997, and 1996, outstanding shares of $100  Preference Stock
were 20,543 and 21,630, respectively.

PREFERRED STOCK
PRIDES Convertible - during August 1997, the remaining 8,673,850
outstanding shares of PRIDES were converted into 7,227,848 shares
of Common Stock pursuant to the terms of the PRIDES Certificate of
Designations.  Further, in accordance with the PRIDES
Certificate of Designations, no dividends were paid or payable for the
period June 30, 1997, to, but not including, the date of
conversion.  However, in accordance with generally accepted accounting
principles, the $1.3 of accrued dividends attributable to
the period June 30, 1997, to, but not including, the conversion date is
treated as an increase in Additional capital at the date
of conversion and must still be reflected as a reduction of Net income
available to common shareholders.

Series A Convertible - In September 1995, the Company redeemed all
1,938,295 shares of its Series A Mandatory Conversion Premium
Dividend Preferred Stock, which resulted in the simultaneous redemption of
all of its $.65 Depositary Shares in exchange for (i)
13,126,521 shares of the Company's Common Stock and (ii) $2.8 in cash in
satisfaction of all accrued and unpaid dividends and
fractional shares of Common Stock that would have otherwise been issuable.

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, 1997, 27,938,250
shares of the Company's Common Stock (the "Pledged
Shares") beneficially owned by MAXXAM Group Holdings Inc. ("MGHI"), a
wholly owned subsidiary of MAXXAM, were pledged as security
for debt of MAXXAM Group Inc. ("MGI"), a wholly owned subsidiary of MGHI,
consisting of $100.0 aggregate principal amount of
11-1/4% Senior Secured Notes due 2003 and $125.7 aggregate principal amount
of 12-1/4% Senior Secured Discount Notes due 2003
(collectively the "MGI Secured Debt").  Additionally, up to 16,055,000 of
the Pledged Shares are to be pledged by MGHI as security
for $130.0 principal amount of 12% Senior Secured Notes due 2003 issued in
December 1996 by MGHI, if any of the Pledged Shares are
released as security for the MGI Secured Debt by reason of an early
retirement of such indebtedness (other than by a refinancing).

9.   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 10), 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 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.  The aggregate minimum amount of required
future principal payments at December 31, 1997, is $97.6, of
which approximately $12.0 is due in each of 2000 and 2001 with the balance
being due thereafter.  KACC's share of payments,
including operating costs and certain other expenses under the agreements,
has ranged between $100.0 - $120.0 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, 1997, are
as follows: years  ending December 31, 1998 - $26.5;
1999 - $32.0; 2000 - $28.8; 2001 - $28.1; 2002 - $26.4; thereafter -
$134.3.  The future minimum rentals receivable under
noncancelable subleases was $62.5 at December 31, 1997.

Rental expenses were $30.4, $29.6, and $29.0, for the years ended December
31, 1997, 1996, and 1995, respectively.

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 lawsuits under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments
Reauthorization Act of 1986 ("CERCLA"), and, along with certain other
entities, has been named as a potentially responsible party
for remedial costs at certain third-party sites listed on the National
Priorities List under CERCLA.

Based on the Company's evaluation of these and other environmental matters,
the Company has established environmental accruals,
primarily related to potential solid waste disposal and soil and
groundwater remediation matters.  The following table presents
the changes in such accruals, which are primarily included in Long-term
liabilities, for the years ended December 31, 1997, 1996,
and 1995:


<TABLE>
<CAPTION>
                                                              1997            1996            1995
- --------------------------------------------------------------------------------------------------
<S>                                                 <C>             <C>             <C>
Balance at beginning of period                      $        33.3   $        38.9   $        40.1 
Additional amounts                                            2.0             3.2             3.3 
Less expenditures                                            (5.6)           (8.8)           (4.5)
                                                    --------------  --------------  --------------
Balance at end of period                            $        29.7   $        33.3   $        38.9 
                                                    ==============  ==============  ==============

</TABLE>


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 $8.0 for the years
1998 through 2002 and an aggregate of approximately $8.0 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
$18.0.  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
actively pursuing claims in this regard.  However, no accruals have been
made for any such insurance recoveries and no assurances
can be given that the Company will be successful in its attempt to recover
incurred or future costs.

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 manufactured for at least 20 years.

The following table presents the changes in number of such claims pending
for the years ended December 31, 1997, 1996, and 1995.


<TABLE>
<CAPTION>
                                                           1997            1996            1995
- -----------------------------------------------------------------------------------------------
<S>                                              <C>             <C>             <C>
Number of claims at beginning of period                 71,100          59,700          25,200 
Claims received                                         15,600          21,100          41,700 
Claims settled or dismissed                             (9,300)         (9,700)         (7,200)
                                                 --------------  --------------  --------------
Number of claims at end of period                       77,400          71,100          59,700 
                                                 ==============  ==============  ==============

</TABLE>


Based on past experience and reasonably anticipated future activity, the
Company has established an accrual for estimated
asbestos-related costs for claims filed and estimated to be filed through
2008.  There are inherent uncertainties involved in
estimating asbestos-related costs, and the Company's actual costs could
exceed these estimates.  The Company's accrual was
calculated based on the current and anticipated number of asbestos-related
claims, the prior timing and amounts of asbestos-related payments, and the
advice of Wharton Levin Ehrmantraut Klein & Nash, P.A. with respect to the
current state of the law
related to asbestos claims.  Accordingly, an estimated asbestos-related
cost accrual of $158.8, before consideration of insurance
recoveries, is included primarily in Long-term liabilities at December 31,
1997. While the Company does not presently believe
there is a reasonable basis for estimating such costs beyond 2008 and,
accordingly, no accrual has been recorded for such costs
which may be incurred beyond 2008, there is a reasonable possibility that
such costs may continue beyond 2008, and such costs may
be substantial.  The Company estimates that annual future cash payments in
connection with such litigation will be approximately
$13.0 to $20.0 for each of the years 1998 through 2002, and an aggregate of
approximately $80.0 thereafter.

The Company believes that KACC has insurance coverage available to recover
a substantial portion of its asbestos-related costs.
Claims for recovery from some of KACC's insurance carriers are currently
subject to pending litigation and other carriers have
raised certain defenses, which have resulted in delays in recovering costs
from the insurance carriers.  The timing and amount of
ultimate recoveries from these insurance carriers are dependent upon the
resolution of these disputes.  The Company believes,
based on prior insurance-related recoveries in respect of asbestos-related
claims, existing insurance policies, and the advice of
Thelen, Marrin, Johnson & Bridges LLP with respect to applicable insurance
coverage law relating to the terms and conditions of
those policies, that substantial recoveries from the insurance carriers are
probable.  Accordingly, an estimated aggregate
insurance recovery of $134.0, determined on the same basis as
the asbestos-related cost accrual, is recorded primarily in Other
assets at December 31, 1997.

Subsequent to December 31, 1997, KACC reached agreements settling
approximately 25,000 of the pending asbestos-related claims. 
Also, subsequent to year-end 1997, KACC reached agreements on asbestos
related coverage matters with two insurance carriers under
which the Company will collect a total of approximately $17.5 during the
first quarter of 1998.  The insurance recoveries will
reduce the approximately $134.0 of asbestos related receivable accrued at
December 31, 1997.  As the amounts related to the claim
settlements and insurance recoveries were consistent with the Company's
year-end 1997 accrual assumptions, these events are not
expected to have a material impact on the Company's financial position,
results of operations or liquidity.

Management continues to monitor claims activity, the status of lawsuits
(including settlement initiatives), legislative progress,
and costs incurred in order to ascertain whether an adjustment to the
existing accruals should be made to the extent that
historical experience may differ significantly from the Company's
underlying assumptions.  While uncertainties are inherent in the
final outcome of these asbestos matters and it is presently impossible to
determine the actual costs that ultimately may be
incurred and insurance recoveries that will be received, management
currently believes that, based on the factors discussed in the
preceding paragraphs, the resolution of asbestos-related uncertainties and
the incurrence of asbestos-related costs net of related
insurance recoveries should not have a material adverse effect on the
Company's consolidated financial position, results of
operations, or liquidity.

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

10.  DERIVATIVE FINANCIAL INSTRUMENTS AND RELATED HEDGING PROGRAMS

At December 31, 1997, the net unrealized loss on KACC's position in
aluminum forward sales and option contracts, (based on an
average price of $1,643 per ton ($.75 per pound) of primary aluminum),
natural gas and fuel oil forward purchase and option
contracts, and forward foreign exchange contracts, was approximately $21.0. 
Any gains or losses on the derivative contracts
utilized in KACC's hedging activities are offset by losses or gains,
respectively, on the transactions being hedged.

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

From time to time in the ordinary course of business, KACC enters into
hedging transactions to provide price risk management in
respect of the net exposure of earnings resulting from (i) anticipated
sales of alumina, primary aluminum and fabricated aluminum
products, less (ii) expected purchases of certain items, such as aluminum
scrap, rolling ingot, and bauxite, whose prices
fluctuate with the price of primary aluminum.  Forward sales contracts are
used by KACC to effectively fix the price that KACC
will receive for its shipments.  KACC also uses option contracts (i) to
establish a minimum price for its product shipments, (ii)
to establish a "collar" or range of price for KACC's anticipated sales,
and/or (iii) to permit KACC to realize possible upside
price movements.  As of December 31, 1997, KACC had sold forward, at fixed
prices, approximately 109,850 and 24,000 tons of
primary aluminum with respect to 1998 and 1999, respectively.  KACC had
also purchased put options to establish a minimum price
for approximately 52,000 tons with respect to 1998 and as of December 31,
1997, had entered into option contracts that established
a price range for an additional 243,600 and 124,500 tons with respect to
1998 and 1999, respectively.  Additionally, at December
31, 1997, KACC also held fixed price purchase contracts for 134,850 tons of
primary aluminum with respect to 1998.

As of December 31, 1997, KACC had sold forward virtually all of the alumina
available to it in excess of its projected internal
smelting requirements for 1998 and 1999 at prices indexed to future prices
of primary aluminum.

ENERGY
KACC is exposed to energy price risk from fluctuating prices for fuel oil
and natural gas consumed in the production process.
Accordingly, 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, 1997,
KACC had a combination of fixed price purchase and
option contracts for the purchase of approximately 41,000 MMBtu of natural
gas per day during 1998.  At December 31, 1997, KACC
also held a combination of fixed price purchase and option contracts for an
average of 232,000 and 25,000 barrels of fuel oil per
month for 1998 and 1999, respectively.

FOREIGN CURRENCY
KACC enters into forward exchange contracts to hedge material cash
commitments to foreign subsidiaries or affiliates.  At December
31, 1997, KACC had net forward foreign exchange contracts totaling
approximately $136.6 for the purchase of 180.0 Australian
dollars from January 1998 through February 1999, in respect of its
commitments for 1998 and 1999 expenditures denominated in
Australian dollars.

11.  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 aggregate foreign currency gain included in determining net income was
immaterial for the years ended December 31, 1997, 1996,
and 1995.

No single customer accounted for sales in excess of 10% of total revenue in
1997, 1996 or 1995.

Export sales were less than 10% of total revenue during the years ended
December 31, 1997, 1996, and 1995.

Geographical area information relative to operations is summarized as
follows:


<TABLE>
<CAPTION>
                                        Year Ended                                              Other
                                      December 31,    Domestic   Caribbean         Africa     Foreign  Eliminations          Total
- -------------------------------------------------------------------------------------------------------------------  -------------
<S>                                                 <C>         <C>         <C>            <C>           <C>         <C>
Net sales to unaffiliated customers           1997  $ 1,720.3   $   204.6   $      234.2   $   214.1                 $    2,373.2 
                                              1996    1,610.0       201.8          198.3       180.4                      2,190.5 
                                              1995    1,589.5       191.7          239.4       217.2                      2,237.8 

Sales and transfers among                     1997              $   121.7                  $   197.3     $  (319.0)
     geographic areas                         1996                  116.9                      206.0       (322.9)
                                              1995                   79.6                      191.5       (271.1)

Equity in income (losses) of                  1997  $     4.8                              $    (1.9)                $        2.9 
     unconsolidated affiliates                1996         .3                                    8.5                          8.8 
                                              1995        (.2)                                  19.4                         19.2 

Operating income                              1997  $    18.9   $    11.6   $       72.2   $    65.3                 $      168.0 
                                              1996        4.4         1.6           27.8        64.0                         97.8 
                                              1995       32.0         9.8           83.5        85.3                        210.6 

Investment in and advances to                 1997  $    15.8   $    23.9                  $   108.9                 $      148.6 
     unconsolidated affiliates                1996         .5        25.3                      142.6                        168.4 

Identifiable assets                           1997  $ 2,274.9   $   391.2   $      179.6   $   168.2                 $    3,013.9 
                                              1996    2,136.7       391.2          194.7       211.4                      2,934.0 

</TABLE>


Financial information by industry segment at December 31, 1997 and 1996,
and for the years ended December 31, 1997, 1996, and
1995, is as follows:


<TABLE>
<CAPTION>
                                        Year Ended       Bauxite &        Aluminum
                                      December 31,         Alumina      Processing       Corporate           Total
- ------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>             <C>             <C>             <C>
Net sales to unaffiliated customers           1997  $       483.3   $     1,889.9                   $     2,373.2 
                                              1996          508.0         1,682.5                         2,190.5 
                                              1995          514.2         1,723.6                         2,237.8 

Intersegment sales                            1997  $       193.2                                   $       193.2 
                                              1996          181.6                                           181.6 
                                              1995          159.7                                           159.7 

Equity in income (losses) of                  1997  $        (7.0)  $         9.9   $        -      $         2.9 
     unconsolidated affiliates                1996            1.7             6.7              .4             8.8 
                                              1995            3.6            15.8             (.2)           19.2 

Operating income (loss)                       1997  $        20.0   $       222.6   $       (74.6)  $       168.0 
                                              1996            1.1           156.5           (59.8)           97.8 
                                              1995           54.0           238.9           (82.3)          210.6 

Depreciation                                  1997  $        29.3   $        58.7   $         3.1   $        91.1 
                                              1996           31.2            61.7             3.1            96.0 
                                              1995           31.1            60.4             2.8            94.3 

Capital expenditures                          1997  $        27.8   $        99.0   $         1.7   $       128.5 
                                              1996           29.9           126.9             4.7           161.5 
                                              1995           27.3            53.0             8.1            88.4 

Investment in and advances to                 1997  $        88.6   $        59.5   $          .5   $       148.6 
     unconsolidated affiliates                1996          121.3            46.6              .5           168.4 

Identifiable assets                           1997  $       735.9   $     1,510.9   $       767.1   $     3,013.9 
                                              1996          784.6         1,408.5           740.9         2,934.0 

</TABLE>



KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
F I V E - Y E A R  F I N A N C I A L  D A T A 
C O N S O L I D A T E D  B A L A N C E  S H E E T S 



<TABLE>
<CAPTION>

                                                                                   December 31,
                                                  ------------------------------------------------------------------------------
(In millions of dollars, except share amounts)              1997            1996            1995            1994            1993
- --------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>             <C>             <C>             <C>             <C>
ASSETS
Current assets:
     Cash and cash equivalents                    $        15.8   $        81.3   $        21.9   $        17.6   $        14.7 
     Receivables                                          340.2           252.4           308.6           199.2           234.7 
     Inventories                                          568.3           562.2           525.7           468.0           426.9 
     Prepaid expenses and other current assets            121.3           127.8            76.6           158.0            60.7 
                                                  --------------  --------------  --------------  --------------  --------------
          Total current assets                          1,045.6         1,023.7           932.8           842.8           737.0 

Investments in and advances to unconsolidated             148.6           168.4           178.2           169.7           183.2 
     affiliates
Property, plant, and equipment - net                    1,171.8         1,168.7         1,109.6         1,133.2         1,163.7 
Deferred income taxes                                     330.6           264.5           269.1           271.2           210.8 
Other assets                                              317.3           308.7           323.5           281.2           233.2 
                                                  --------------  --------------  --------------  --------------  --------------
          Total                                   $     3,013.9   $     2,934.0   $     2,813.2   $     2,698.1   $     2,527.9 
                                                  ==============  ==============  ==============  ==============  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accruals                $       457.3   $       453.4   $       451.2   $       439.3   $       339.7 
     Accrued postretirement medical benefit                45.3            50.1            46.8            47.0            47.6 
          obligation - current portion
     Payable to affiliates                                 82.7            97.0            94.2            85.3            62.4 
     Long-term debt - current portion                       8.8             8.9             8.9            11.5             8.7 
                                                  --------------  --------------  --------------  --------------  --------------
          Total current liabilities                       594.1           609.4           601.1           583.1           458.4 

Long-term liabilities                                     491.9           458.1           548.5           495.5           501.8 
Accrued postretirement medical benefit obligation         720.3           722.5           734.0           734.9           713.1 
Long-term debt                                            962.9           953.0           749.2           751.1           720.2 
Minority interests                                        127.7           121.7           122.7           116.2           105.0 

Stockholders' equity:
     Preferred stock                                       -                 .4              .4              .6              .2 
     Common stock                                            .8              .7              .7              .6              .6 
     Additional capital                                   533.8           531.1           530.3           527.8           425.9 
     Retained earnings (accumulated deficit)             (417.6)         (460.1)         (459.9)         (502.6)         (375.7)
     Additional minimum pension liability                  -               (2.8)          (13.8)           (9.1)          (21.6)
                                                  --------------  --------------  --------------  --------------  --------------
          Total stockholders' equity                      117.0            69.3            57.7            17.3            29.4 
                                                  --------------  --------------  --------------  --------------  --------------
          Total                                   $     3,013.9   $     2,934.0   $     2,813.2   $     2,698.1   $     2,527.9 
                                                  ==============  ==============  ==============  ==============  ==============

Debt-to-capital ratio(1)                                   77.8            81.2            78.1            82.4            81.3 

</TABLE>




(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.


 KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
 F I V E - Y E A R  F I N A N C I A L  D A T A 
 S T A T E M E N T S  O F  C O N S O L I D A T E D  I N C O M E 
 ( L O S S ) 



<TABLE>
<CAPTION>
                                                                                    Year Ended December 31,
                                                            ----------------------------------------------------------------------
(In millions of dollars, except share amounts)                      1997          1996           1995          1994           1993
- -------------------------------------------------------------------------------------- ---------------------------- --------------
<S>                                                         <C>           <C>            <C>           <C>            <C>
Net sales                                                   $   2,373.2   $   2,190.5    $   2,237.8   $   1,781.5    $   1,719.1 
                                                            ------------  ------------   ------------  ------------   ------------
Costs and expenses:
     Cost of products sold                                      1,962.6       1,869.1        1,798.4       1,625.5        1,587.7 
     Depreciation                                                  91.1          96.0           94.3          95.4           97.1 
     Selling, administrative, research and development,
          and general                                             131.8         127.6          134.5         116.8          121.9 
     Restructuring of operations                                   19.7           -              -             -             35.8 
                                                            ------------  ------------   ------------  ------------   ------------
          Total costs and expenses                               2,205.2      2,092.7        2,027.2       1,837.7        1,842.5 
                                                            ------------  ------------   ------------  ------------   ------------

Operating income (loss)                                           168.0          97.8          210.6         (56.2)        (123.4)

Other income (expense):
     Interest expense                                            (110.7)        (93.4)         (93.9)        (88.6)         (84.2)
     Other - net                                                    3.0          (2.7)         (14.1)         (7.3)           (.9)
                                                            ------------  ------------   ------------  ------------   ------------
Income (loss) before income taxes, minority interests,
     extraordinary loss, and cumulative effect of
     changes in accounting principles                              60.3           1.7          102.6        (152.1)        (208.5)

(Provision) credit for income taxes                                (8.8)          9.3          (37.2)         53.8           86.9 

Minority interests                                                 (3.5)         (2.8)          (5.1)         (3.1)          (1.5)
                                                            ------------  ------------   ------------  ------------   ------------
Income (loss) before extraordinary loss and cumulative
     effect of changes in accounting principles                    48.0           8.2           60.3        (101.4)        (123.1)

Extraordinary loss on early extinguishments of debt,
     net of tax benefits of $2.9 and $11.2 for 1994 and             -             -              -            (5.4)         (21.8)
     1993, respectively

Cumulative effect of changes in accounting principles, net
     of tax benefit of $237.7                                       -             -              -             -           (507.3)
                                                            ------------  ------------   ------------  ------------   ------------
Net income (loss)                                                  48.0           8.2           60.3        (106.8)        (652.2)

Preferred stock dividends                                          (5.5)         (8.4)         (17.6)        (20.1)          (6.3)
                                                            ------------  ------------   ------------  ------------   ------------
Net income (loss) available to common shareholders          $      42.5   $       (.2)   $      42.7   $    (126.9)   $    (658.5)
                                                            ============  ============   ============  ============   ============
Earnings (loss) per share:
     Basic                                                  $       .57   $       .00    $       .69   $     (2.18)   $    (11.47)
     Diluted                                                $       .57   $       .00    $       .69   $     (2.18)   $    (11.47)

Weighted average shares outstanding:
     Basic                                                       74,221        71,644         62,000        58,139         57,423 
     Diluted                                                     74,382        71,644         62,264        58,139         57,423 

</TABLE>



KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
Q U A R T E R L Y  F I N A N C I A L  D A T A  ( U N A U D I T E D ) 



<TABLE>
<CAPTION>
                                                                              Quarter Ended
                                                  --------------------------------------------------------------------
(In millions of dollars, except share amounts)          March 31         June 30      September 30     December 31
- ----------------------------------------------------------------------------------------------------------------------
<S>                                               <C>             <C>               <C>             <C>
1997
     Net sales                                    $       547.4   $       597.1    $        634.1   $       594.6 
     Operating income                                      31.3            35.3 (1)          54.5            46.9 
     Net income                                             2.6            13.7 (2)          17.5            14.2 
     Earnings per share:
          Basic                                             .01             .16 (2)           .22             .18 
          Diluted                                           .01             .16 (2)           .22             .18 
     Common stock market price:
          High                                            13-5/8          12-1/4               16           14-7/8
          Low                                             10-7/8          10-1/8            11-5/8           8-3/8

1996
     Net sales                                    $       531.1   $       567.6     $       553.4   $       538.4 
     Operating income                                      40.3            36.6              10.5            10.4 (3)
     Net income (loss)                                      9.9             8.2              (6.6)           (3.3)(3)
     Earnings (loss) per share:
          Basic                                             .11             .09              (.12)           (.08)(3)
          Diluted                                           .11             .09              (.12)           (.08)(3)
     Common stock market price:
          High                                           16-1/8          15-3/4            12-1/2              12 
          Low                                                12          10-7/8             9-3/4          10-1/8 


</TABLE>



(1)  Includes a $19.7 pre-tax charge for restructuring of operations and a
     $5.8 pre-tax charge for litigation matters.
(2)  Includes a $19.7 pre-tax charge for restructuring of operations, an
     offsetting after-tax benefit of $12.5 related to the settlement of
     certain tax matters and a $5.8 pre-tax charge for litigation matters.
(3)  Includes approximately $17.0 on an after tax basis resulting from
     settlements of certain tax matters.  Excluding these items, basic loss
     per common share would have been approximately $.32.







                                                               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 and 33-49889.



                                   ARTHUR ANDERSEN LLP


Houston, Texas
March 25, 1998





                                                               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,
1997, which is incorporated into the Company's previously filed
Registration Statements on Form S-3 No.'s 333-16239 and 333-71 and
Registration Statement on Form S-8 No. 33-49889.



                              WHARTON LEVIN EHRMANTRAUT
                                   KLEIN & NASH, P.A.




March 23, 1998





                                                               EXHIBIT 23.3




     We hereby consent to the incorporation by reference in the
Registration Statements on From S-3 (Registration Nos., 333-71 and 333-
16239) and Form S-8 (No. 33-49889) of Kaiser Aluminum Corporation, a
Delaware corporation (the "Company"), of the references to our name and the
advice rendered by our firm that appear in Note 9 of the Notes to the
Consolidated Financial Statements for the year ended December 31, 1997,
included in the Company's Annual Report on Form 10-K for the year ended
1997.



                         THELEN, MARRIN, JOHNSON & BRIDGES LLP




March 23, 1998











                              CERTIFICATE OF RETIREMENT
                                          OF
                             KAISER ALUMINUM CORPORATION
                                        UNDER
                SECTION 243 OF THE GENERAL CORPORATION LAW OF DELAWARE
                ------------------------------------------------------

               In accordance with Section 243 of the General Corporation
          Law of the State of Delaware, Kaiser Aluminum Corporation (the
          "Corporation"), a Delaware corporation, DOES HEREBY CERTIFY:

               FIRST:    That the Corporation has redeemed or converted and
          retired eight million, eight hundred, fifty-five thousand, five
          hundred fifty (8,855,550) shares of its 8.255% PRIDES,
          Convertible Preferred Stock, par value $.05 per share, of the
          Corporation (the "8.255% PRIDES"), which constituted all of the
          issued and outstanding shares of the 8.255% PRIDES.

               SECOND:   That the Certificate of Designations of 8.255%
          PRIDES, Convertible Preferred Stock of Kaiser Aluminum
          Corporation prohibits the reissuance of the shares of 8.255%
          PRIDES as shares of 8.255% PRIDES when so retired, but provides
          that such retired shares shall resume the status of authorized
          but unissued shares of Preferred Stock, par value $.05 per share,
          of the Corporation, without designation as to series or class,
          and that such shares may thereafter be issued, but not as shares
          of 8.255% PRIDES.

               THIRD:    That when this Certificate of Retirement becomes
          effective in accordance
 with Section 103 of the General
          Corporation Law of the State of Delaware, it shall have the
          effect of amending the Restated Certificate of Incorporation of
          the Corporation so as to reduce accordingly the number of
          authorized shares of the 8.255% PRIDES.

               IN WITNESS WHEREOF, the Corporation has caused this
          Certificate of Retirement to be signed by E. Bruce Butler, a Vice
          President, and attested by John Wm. Niemand II, its Secretary,
          this 12th day of February, 1998.


                                   KAISER ALUMINUM CORPORATION


                                   By:  /s/ E. Bruce Butler
                                       -------------------------------
                                       E. Bruce Butler, Vice President
          ATTEST:

          /s/ John Wm. Niemand II 
          ------------------------------
          John Wm. Niemand II, Secretary

          [Corporate Seal]




                                                             EXECUTION COPY


                   TWELFTH AMENDMENT TO CREDIT AGREEMENT
                   -------------------------------------


          THIS TWELFTH AMENDMENT TO CREDIT AGREEMENT (this 
"Amendment"), dated as of January 13, 1998, 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 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, and the Eleventh
Amendment to Credit Agreement and Limited Waivers, dated as of October 20,
1997 (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.
          -------------------------------------

          A.   Section 1.1 of the Credit Agreement is hereby 
               -----------
amended by amending the following definitions contained therein to read in
their entirety as follows:  
          "`Revolving Commitment Termination Date' means the 
            -------------------------------------
            earliest of

               (a)  March 31, 1994 (unless the Initial Borrowing Date shall
have occurred before the close of business, San Francisco time, on such
date);

               (b)  August 15, 2001;

               (c)  the date on which the Revolving Commitment Amount is
reduced to zero pursuant to Section 2.2; and
                                      -----------

               (d)  the date on which any Commitment Termination Event
occurs.

Upon the occurrence of any event described in clause (a), (b), 
                                              ----------- ----
(c), or (d), the Revolving Commitment of each Lender and the 
- ---     ----
Swingline Commitment of Business Credit shall terminate automatically and
without any further action."

          "`Stated Maturity Date' means (a) in the case of any 
            --------------------
Revolving Loan, August 15, 2001, and (b) in the case of any Swingline Loan,
the earlier of (i) the seventh calendar day following the date such
Swingline Loan is made or (ii) August 15, 2001."

     1.2  Amendments to Article V: Letters of Credit.
          ------------------------------------------

          A.   Section 5.1 of the Credit Agreement is hereby 
               -----------
amended by amending clause (b)(iii) thereof to read in its entirety as
follows:

          "(iii) such Letter of Credit is not stated to expire on a date
(its "Stated Expiry Date") no later than the tenth 
             ------------------
Business Day immediately preceding August 15, 2001;"

     1.3  Amendments to Article IX:  Covenants.
          ------------------------------------ 

          A.   Section 9.2.2 of the Credit Agreement is hereby 
               -------------
amended by deleting the reference to "February 15, 1999" contained in
clause (b)(x) thereof and substituting a reference 
             -------------
to "August 15, 2001" therefor.

          B.   Section 9.2.3 of the Credit Agreement is hereby 
               -------------
amended by deleting the reference to "February 15, 1999" contained in
clause (w) thereof and substituting a reference to 
             ----------
"August 15, 2001" therefor.

          C.   Section 9.2.7 of the Credit Agreement is hereby 
               -------------
amended by adding the phrase "and each Fiscal Year thereafter" following
the date "1998" contained therein.

          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 "Twelfth 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, 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 Twelfth 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 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 Twelfth 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 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/ Karen A. Twitchell   By:  /s/ Karen A. Twitchell
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer                Its: Treasurer

BANKAMERICA BUSINESS CREDIT,  BANKAMERICA BUSINESS CREDIT,
  INC., as Agent                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


BANK OF AMERICA NATIONAL TRUST     THE CIT GROUP/BUSINESS
  AND SAVINGS ASSOCIATION             CREDIT, INC.

By: /s/James P. Johnson       By: /s/ Timothy S. Culver
Name Printed: James P. Johnson  Name Printed: Timothy S. Culver
Its: Managing Director        Its: Assistant Vice President


CONGRESS FINANCIAL CORPORATION     HELLER FINANCIAL, INC.
   (WESTERN)

By: /s/ Kristine Metchikian   By: /s/ Sara Hopkins
Name Printed: Kristine Metchikian  Name Printed: Sara Hopkins
Its: Vice President           Its: Vice President


LA SALLE NATIONAL BANK        TRANSAMERICA BUSINESS CREDIT
                                CORPORATION

By: /s/ Douglas C. Colletti   By: /s/ Robert L. Heinz
Name Printed: Douglas C. Colletti  Name Printed: Robert L. Heinz
Its: First Vice President     Its: Senior Vice President


ABN AMRO BANK N.V.
San Francisco International Branch
by:  ABN AMRO North America, 
Inc., as agent

By: /s/ Bradford H. Leahy
Name Printed: Bradford H. Leahy
Its: Assistant Vice President


By: /s/ Jeffrey A. French
Name Printed: Jeffrey A. French
Its: Group Vice President & Director

ACKNOWLEDGED AND AGREED TO:

AKRON HOLDING CORPORATION     KAISER ALUMINUM & CHEMICAL
                                INVESTMENT, INC.

By: /s/ Karen A. Twitchell    By: /s/ Karen A. Twitchell
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer                Its: Treasurer

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

By: /s/ Karen A. Twitchell    By: /s/ Karen A. Twitchell
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer                Its: Treasurer

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

By: /s/ Karen A. Twitchell    By: /s/ Karen A. Twitchell
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer                Its: Treasurer

KAISER ALUMINA AUSTRALIA      KAISER FINANCE CORPORATION
  CORPORATION

By: /s/ Karen A. Twitchell    By: /s/ Karen A. Twitchell
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer                Its: Treasurer

ALPART JAMAICA INC.           KAISER JAMAICA CORPORATION

By: /s/ Karen A. Twitchell    By: /s/ Karen A. Twitchell
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer                Its: Treasurer

KAISER BAUXITE COMPANY        KAISER EXPORT COMPANY

By:  /s/ Karen A. Twitchell   By: /s/ Karen A. Twitchell
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer                Its: Treasurer

KAISER MICROMILL HOLDINGS, LLC  KAISER SIERRA MICROMILLS, LLC

By:  /s/ Karen A. Twitchell   By: /s/ Karen A. Twitchell
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer                Its: Treasurer

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

By:  /s/ Karen A. Twitchell   By: /s/ Karen A. Twitchell
Name Printed: Karen A. Twitchell Name Printed: Karen A. Twitchell
Its: Treasurer                Its: Treasurer

KAISER BELLWOOD CORPORATION

By: /s/ Karen A. Twitchell
Name Printed: Karen A. Twitchell
Its: Treasurer




                  SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
                  ----------------------------------------

     This Second Amendment to Employment Agreement is made and entered into
as of December 10, 1997, by and between Kaiser Aluminum Corporation ("KAC")
and Kaiser Aluminum & Chemical Corporation ("KACC"), which are collectively
referred to herein as the "Company", and George T. Haymaker, Jr., referred
to herein as "Haymaker".  The Company and Haymaker are collectively
referred to herein as the "Parties".

     WHEREAS, the Company and Haymaker entered into an Employment Agreement
on and as of April 1, 1993 (the "Agreement"); and

     WHEREAS, the Parties entered into a First Amendment (the "First
Amendment") of said Agreement on and as of November 28, 1995, to clarify
and amend certain provisions of the Agreement; and

     WHEREAS, the Parties wish to extend the Term of the Agreement
including the First Amendment and to amend certain other provisions to
recognize events during the passage of time since the First Amendment;

     NOW, THEREFORE, the Parties do covenant and agree and amend the
Agreement, as amended by the First Amendment, as follows:

     1.   Section 2 of the Agreement is amended to read in full 
     as follows:

     2.   TERM AND STARTING DATE

          This Agreement and its Amendments shall be binding and effective
from and after
 the date of its execution, April 1, 1993, and shall
continue, subject to earlier termination as hereinafter set forth,
until December 5, 1999, Haymaker's sixty-second birthday.

     2.   Section 3 of the First Amendment and the Agreement are 
     amended to read in full as follows:

     3.   SALARY AND BONUS

          Until the last day of January, 1998, Haymaker will be paid a base
salary of $504,000.  Effective February 1, 1998, Haymaker will be paid
a base salary of no less than $569,000.  Haymaker is a continuing
participant in the Kaiser Executive Compensation Programs which went
into effect in 1995, 1996, and 1997, and will participate in future
approved Executive Compensation Programs going into effect in 1998 and
1999.

          The Total Annual Incentive Target for Haymaker's participation in
the Executive Compensation Programs was set at $1,035,000 as of July
30, 1997, and will be increased to $1,315,000 at January 31, 1998, as
previously approved by the Compensation Committee.  The Total Annual
Incentive Target includes both a Short Term Incentive Target for the
applicable year and the Long Term Incentive Target for a Performance
Period covering three years including the applicable year.

          Haymaker's Short Term Incentive Target for 1997 is $311,000, and
his Long Term Incentive Targets for the years ending 1997, 1998, and
1999 are: $717,100; $818,500; and $850,000, respectively, such amounts
being equal to the Long Term Incentive Targets approved at the
beginning of each Long Term Incentive Performance Period adjusted for
the amounts and effective dates of subsequent increases approved by
the Compensation Committee.

          Haymaker's Short Term Incentive Target for 1998 and 1999 will be
$387,900 and $395,000, giving effect to the levels previously approved
by the Compensation Committee, unless subsequently increased by the
Committee; and his Long Term Incentive Targets for the portions of the
three year Long Term Incentive Performance Periods ending in the years
2000 and 2001 in which he participates will be $914,600 and $920,000,
respectively, also giving effect to the amounts previously approved by
the Compensation Committee, unless subsequently increased by the
Committee.

     3.   Section 10(d) of the Agreement is amended to read in 
     full as follows:

          d.   By the Company Without Cause

          This Agreement may also be terminated by the Company without
cause upon 30 days advance written notice to Haymaker.  However, if
the Company terminates this Agreement without cause prior to the full
vesting of the SERB, the initial grant of options to Haymaker made in
accordance with this Employment Agreement shall fully vest and become
exercisable commencing at the time that the notice of termination is
provided to Haymaker.  KACC shall also pay to Haymaker a severance
payment equal to two times the amount of Haymaker's base annual salary
at the time of the notice of termination.

     IN WITNESS WHEREOF, the Parties have signed this Second Amendment to
Employment Agreement as of the date first above written.

Haymaker                      The Company
- --------                      ------------


                              Kaiser Aluminum Corporation


/s/ George T. Haymaker, Jr.
- --------------------------
George T. Haymaker, Jr.       By     /s/ E. Bruce Butler
                                 -----------------------------
                              E. Bruce Butler
                              Vice President and General Counsel


                              Kaiser Aluminum & Chemical
                               Corporation


                              By:    /s/ E. Bruce Butler
                                 -----------------------------
                              E. Bruce Butler
                              Vice President and General Counsel
<PAGE>




<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>

This schedule contains summary financial information extracted from the
consolidated financial statements of the Company for the twelve months ended
December 31, 1997, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000811596
<NAME> KAISER ALUMINUM CORPORATION
<MULTIPLIER> 1,000,000
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1997
<PERIOD-START>                             JAN-01-1997
<PERIOD-END>                               DEC-31-1997
<CASH>                                              16
<SECURITIES>                                         0
<RECEIVABLES>                                      340
<ALLOWANCES>                                         6
<INVENTORY>                                        568
<CURRENT-ASSETS>                                 1,046
<PP&E>                                           1,172
<DEPRECIATION>                                      91
<TOTAL-ASSETS>                                   3,014
<CURRENT-LIABILITIES>                              594
<BONDS>                                            963
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             1
<OTHER-SE>                                         116
<TOTAL-LIABILITY-AND-EQUITY>                     3,014
<SALES>                                          2,373
<TOTAL-REVENUES>                                 2,373
<CGS>                                            1,963
<TOTAL-COSTS>                                    1,963
<OTHER-EXPENSES>                                   223
<LOSS-PROVISION>                                    20
<INTEREST-EXPENSE>                                 111
<INCOME-PRETAX>                                     60
<INCOME-TAX>                                         9
<INCOME-CONTINUING>                                 48
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                        48
<EPS-PRIMARY>                                      .57
<EPS-DILUTED>                                      .57
        

</TABLE>