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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington,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, 19941996
Commission file number 1-9447

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

DelawareDELAWARE 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

$.65 Depositary shares, each8.25% PRIDES, Convertible Preferred Stock, New York Stock Exchange
representing ownership of one-tenth
of a share of Series A Mandatory
Conversion Premium Dividend
Preferred Stock

Series A Mandatory Conversion Premium None
Dividend Preferred Stock,
$.05 par value

8.255% PRIDES, Convertible New York Stock Exchange
Preferred Stock,
$.05 par value

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 15, 1995,14, 1997, there were 58,205,08371,651,349 shares of the common stockCommon Stock of the
registrant outstanding. Based upon New York Stock Exchange closing prices on
March 15, 1995,14, 1997, the aggregate market value of the registrant's common stock, $.65 depositary shares,Common Stock and
8.255% PRIDES held by non-affiliates was $327.8$368.8 million.

Certain portionsportion of the registrant's annual report to shareholders for the
fiscal year ended December 31, 1994,1996, 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.

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NOTE

Kaiser Aluminum Corporation's Report on Form 10-K filed with the Securities and
Exchange Commission includes all exhibits required to be filed with the Report.
Copies of this Report on Form 10-K, including only Exhibit 21 of the exhibits
listed on pages 19-2223-26 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

(i)

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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TABLE OF CONTENTS

Page
----

PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . 1
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . 11
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS . . . . . . . . . . . . . . . . . . . 15

PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS . . . . . . . . . 15
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . 16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . 16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . 16
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . 16

PART III . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE .
REGISTRANT 16
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . 16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT . . . . . . . . . . . . . . . . 16
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 16

PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K . . . . . . . . . . . . 16

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 18

INDEX OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . 19

EXHIBIT 21 SUBSIDIARIES . . . . . . . . . . . . . . . . . .
Page
----

PART I.......................................................................... 1

ITEM 1. BUSINESS...................................................... 1

ITEM 2. PROPERTIES.................................................... 11

ITEM 3. LEGAL PROCEEDINGS............................................. 12

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........... 15

PART II......................................................................... 15

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS................................ 15

ITEM 6. SELECTED FINANCIAL DATA....................................... 15

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................... 15

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................... 15

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE........................ 15

PART III........................................................................ 15

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............ 15

ITEM 11. EXECUTIVE COMPENSATION........................................ 15

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.............................................. 15

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................ 15

PART IV......................................................................... 16

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K......................................... 16

SCHEDULE I .............................................................. 17

SIGNATURES .............................................................. 22

INDEX OF EXHIBITS............................................................... 23

EXHIBIT 21 SUBSIDIARIES.................................................. 27

(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 - Industry OverviewOverview;"
"Business - The Company - Profit Enhancement and Cost Reduction Initiative,"
"Production Operations," "-Competition," "-Research and Development,"
"-Business 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 1996 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.

INDUSTRY OVERVIEW

Primary aluminum is produced by the refining of bauxite (the major
aluminum-bearing ore) into alumina (the intermediate material) and the
reduction of alumina into primary aluminum. Approximately two pounds of bauxite
are required to produce one pound of alumina, and approximately two pounds of
alumina are required to produce one pound of primary aluminum. Aluminum's
valuable physical properties include its light weight, corrosion resistance,
thermal and electrical conductivity, and high tensile strength.

Demand

The packaging, transportation and transportationconstruction industries are the principal
consumers of aluminum in the United States, Japan, Germany, France, Italy, and
Western Europe.the United Kingdom. In the packaging industry, which accounted for approximately 22%an estimated
21% of aluminum consumption in 1993,1996 in the previously referenced countries,
aluminum's recyclability and weight advantages have enabled it to gain market
share from steel and glass, primarily in the beverage container area. Nearly
all beer cans and approximately 95% of the soft drink cans manufactured for the United States market are
made of aluminum. GrowthKaiser Aluminum Corporation ("KAC" or the "Company") believes
that growth in the packaging area is generally expectedlikely to continue inthrough the 1990s due
to general population increase and to further penetration of the beverage
cancontainer market in Asia
and Latin America, where aluminum cans are a substantially lower
percentage of the total beverage container market thanemerging markets. The Company believes that growth in
demand for can sheet in the United States.States will follow the growth in population,
offset, in part, by the effects of the use of lighter gauge aluminum for can
sheet and by plastic container production.

In the transportation industry, which accounted for approximately 29%an estimated 30% of
aluminum consumption in the United States, Japan, Germany, France, Italy and
Western
Europethe United Kingdom in 1993,1996, automotive manufacturers use aluminum instead of
steel, ductile iron, or copper for an increasing number of components,
including radiators, wheels, suspension components, and engines, in order to
meet more stringent environmental, safety, and fuel efficiency requirements through vehicle weight reduction.
Managementstandards. The
Company believes that sales of aluminum to the transportation industry have
considerable growth potential due to projected increases in the use of aluminum
in automobiles. In addition, the Company believes that consumption of aluminum
in the construction industry will follow the cyclical growth pattern of that
industry, and will benefit from higher growth in Asian and Latin American
economies.

Supply

As of year-end 1994, Western1996, estimated world aluminum capacity from 108179 smelting
facilities was approximately 16.322.9 million tons* per year. World production of
primary aluminum for 1996 increased approximately 4.5% compared to 1995. Net
exports of aluminum from the former Sino Soviet bloc increased approximately
threefold200% from 1990 levels during the period from 1991 through 1994 to approximately twoan estimated 1.9 million tons per year. These exports contributed to
a significant increase in London Metal Exchange stocks of primary
aluminum which peaked in mid-1994. See "-Recent Industry Trends."

Government officials from the European Union, the United States,
Canada, Norway, Australia, and the Russian Federation have ratifiedyear as

a trade agreement a Memorandum of Understanding (the "Memorandum")
which provided, in part, for (i) a reduction in Russian Federation
primary aluminum production by 300,000 tons per year within three
months of the date of ratification of the Memorandum and an additional
200,000 tons within the following three months, (ii) improved
availability of comprehensive data on Russian aluminum production, and
(iii) certain assistance to the Russian aluminum industry. The
Memorandum did not require specific levels of production cutbacks by
other producing nations. The Memorandum was finalized in February
1994 and is scheduled to remain in effect through the end of 1995.

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

ITEM 1. BUSINESS (continued)(CONTINUED)

of year-end 1996. In addition, one smelter continued to increase production
following its start-up in 1995, and a number of producers restarted idled
capacity in late 1995 and early 1996. These exports, as well as new and
restared capacity, contributed to an increase in London Metal Exchange ("LME")
stocks of primary aluminum which peaked in October 1996 at 970,000 tons. At the
end of 1996, LME stocks of primary aluminum had declined 18,725 tons from this
peak level to 951,275 tons. See "Industry Trends."

Based upon information currently available, managementthe Company believes that
only moderate
additions will be made during 1995-19961997-1999 to Western world alumina and primary aluminum
production capacity. The increases in alumina capacity during 1995-19961997-1999 are
expected to come from one new refinery, which began operations in 1996, and
incremental expansions of existing refineries. RecentIn addition, the Company
believes that there is currently an estimated 1.6 million tons of unutilized
world smelting capacity. The increases in world primary aluminum capacity
during 1997-1999 are expected to come from two new smelters which may begin
operations in 1997, two relocated smelters that are expected to resume
operations in 1998, and the remainder principally from incremental expansions
of existing smelters.

Industry Trends

ThePrimary aluminum industry environment improved significantlyprices have historically been subject to significant cyclical
price fluctuations. During the first half of 1996, the average Midwest United
States transaction price ("AMT Price") for primary aluminum remained relatively
stable in 1994the $.75 per pound range. However, during the second half of the year
the AMT Price fell, reaching a low of $.65 per pound for October 1996, before
recovering late in the year. During 1996, the AMT Price for primary aluminum
was approximately $.72 per pound, compared to 1993. Prices$.86, $.72 and $.54 per pound in
1995, 1994 and 1993, respectively. The AMT Price for primary aluminum for the
week ended March 14, 1997, was approximately $.81 per pound.

The significant improvement in prices during 1994 and 1995 resulted from strong
growth in Western world consumption of aluminum and the curtailment of
production in response to lower prices in prior periods by many producers
worldwide. In 1995, production of primary aluminum wereincreased and consumption of
aluminum continued to grow, but at historic lowsa much lower rate than in real terms near1994. In general,
the beginningoverall aluminum market was strongest in the first half of 1994, but nearly doubled by1995. By the
second half of 1995, orders and shipments for certain products had softened and
the rate of decline in LME inventories had leveled off. By the end of 1994. In response to low1995,
some small increases in LME inventories occurred, and prices of aluminum
weakened from first-half levels. This trend continued throughout most of 1996.
Net reported primary aluminum inventories increased by approximately 62,000
tons in 1996 based upon reports of the LME and the International Primary
Aluminium Institute ("IPAI"), following substantial declines of 764,000 and
1,153,000 tons in 1994 and 1995, respectively. However, since year-end 1996,
LME stocks of primary aluminum have continued to decline from their October
1996 peak level.

Increased production of primary aluminum due to restarts of certain previously
idled capacity, the continued increase in 1993production of a smelter in South
Africa following its start-up in 1995, and the first partcontinued high level of exports
from the Commonwealth of Independent States ("CIS") contributed to increased
supplies of primary aluminum to the Western world in 1996. While the economies
of the major aluminum consuming regions - the United States, Japan, Western
Europe, and Asia - are, in the aggregate, performing relatively well, the
Company believes that the reduction of aluminum inventories by customers, as
prices have continued to decline, has mitigated the growth in primary aluminum
demand that normally accompanies growth in economic and industrial activity.

Western world demand for alumina, and the price of alumina, declined in 1994 a numberin
response to the curtailment of smelting facilities wereWestern world smelter production of primary
aluminum, partially or fully curtailed.offset by increased usage of Western world alumina by
smelters in the CIS and in the People's Republic of China ("PRC"). Increased
Western world production of primary aluminum, declinedas well as continued imports of
Western world alumina by the CIS and the PRC, during 1995 resulted in 1994higher
demand for Western world alumina and significantly stronger alumina pricing. In
1996, however, the alumina market softened, primarily as a result of increased
alumina production and decreased alumina exports to approximately 14.5 million tons from approximately
15.1 million tonsthe CIS and the PRC,
resulting in 1993. Demand forlower alumina prices. However, increases in primary aluminum
production as well as reductions in alumina production during the second half
of 1996 resulted in stronger alumina pricing in late 1996.

United States shipments of domestic fabricated aluminum products was
relatively weak in 1993, but became very strong1995 were
approximately at 1994 levels, although in 1995 demand for can sheet in the
United States and became firmsoftened relative to 1994. United States shipments of domestic
fabricated aluminum

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (CONTINUED)

products in Europe1996 are estimated to be approximately at 1995 levels, although in
1994. Primary aluminum prices
improved not only because of improved1996 demand but also because the
inventories of primary aluminum on the London Metal Exchange were
substantially reducedfor can sheet in the second half of 1994. However,
significant amounts of inventory remained at the end of 1994, and
some reduction of prices from year-end 1994 occurred in the first
quarter of 1995United States softened relative to reflect that circumstance.

When previously curtailed smelting capacity is restarted, it will
result in an increase in the demand for alumina to supply those
operations. In addition, in the last several years, large amounts of
alumina have been imported into the Commonwealth of Independent
States. Consequently, management believes that alumina demand and
prices will strengthen as smelters are restarted.

Supply and demand fundamentals for the flat-rolled aluminum products
business, particularly in the can sheet business, improved in 1994
because of higher demand and a reduction of supply. Management
believes that supply and demand for these products will move toward
being in balance. The demand for aluminum extrusions and forgings in
1994 also improved compared to 1993, and supply and demand for these
products also is expected to move toward being in balance.

Overall, management believes that there will be relatively strong
demand for aluminum for the near future, barring an economic
recession. This demand is expected to come both from continued growth
in the developed markets through increased penetration of the
automotive sector, and from general uses in emerging markets.1995.

THE COMPANY

General

The Company General

Kaiser Aluminum Corporation ("the Company") is a direct subsidiary of MAXXAM Inc. ("MAXXAM"). 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)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 1994,1996, KACC produced approximately
2,928,5002,838,000 tons of alumina, of which approximately 71%73% was sold to third
parties, and produced 415,000approximately 473,200 tons of primary aluminum, of which
approximately 54%75% was sold to third parties. KACC is also a major domestic
supplier of fabricated aluminum products. In 1994,1996, KACC shipped approximately
399,000327,100 tons of fabricated aluminum products to third parties, which accounted
for approximately 6%5% of the total tonnage of United States domestic shipments in 1994.shipments.
A majority of KACC's fabricated products are sold to distributors or used by
customers as components in the manufacture and assembly of finished end-use
products. Note 1110 of the Notes to Consolidated Financial Statements contained
in the Company's 19941996 Annual Report to Shareholders (the "Annual Report") is
incorporated herein by reference.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (continued)

The following table sets forth total shipments and intracompany transfers of
KACC's alumina, primary aluminum, and fabricated aluminum operations:

Year Ended December 31,
---------------------------------------------------------------------
1996 1995 1994
1993 1992
---------- ---------------- ------- -------
(in thousands of tons)
ALUMINA:

ALUMINA:
Shipments to Third Parties 2,073.7 2,040.1 2,086.7 1,997.5 2,001.3
Intracompany Transfers 912.4 800.6 820.9 807.5 878.2
PRIMARY ALUMINUM:
Shipments to Third Parties 355.6 271.7 224.0 242.5 355.4
Intracompany Transfers 128.3 217.4 225.1 233.6 224.4
FABRICATED ALUMINUM PRODUCTS:
Shipments to Third Parties 327.1 368.2 399.0 373.2 343.6

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. Through its variable
cost structures, forward sales, and hedging programs, KACC has
attemptedPrimary aluminum prices have historically been subject to
mitigate its exposure to possible declinessignificant cyclical price fluctuations. Alumina prices, as well as fabricated
aluminum product prices (which vary considerably among products), are
significantly influenced by changes in the marketprice 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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (CONTINUED)

exposure resulting from (i) anticipated sales of alumina, primary aluminum, and
fabricated aluminum products, while retainingless (ii) expected purchases of certain items,
such as aluminum scrap, rolling ingot, and bauxite, whose prices fluctuate with
the abilityprice of primary aluminum. Forward sales contracts are used by KACC to
participateeffectively 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 price for its
anticipated sales, and/or (iii) to permit KACC to realize possible upside price
movements. See Notes 1 and 9 of the Notes to Consolidated Financial Statements
in favorable pricing
environmentsthe Annual Report.

Profit Enhancement and Cost Reduction Initiative

In October 1996, KACC established a goal of achieving significant cost
reduction and profit improvements by the end of 1997, with the full effect
planned to be realized in 1998 and beyond, measured against 1996 results. To
achieve this goal KACC plans 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 may materialize. See "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Trends
Sensitivity to Pricesthe initiative will
result in the desired cost reductions and Hedging Programs."other profit improvements.

Production Operations

The Company's operations are conducted through KACC's decentralized business
units which compete throughout the aluminum industry.

o The alumina business unit, which mines bauxite and obtains
additional bauxite tonnage under long-term contracts, produced
approximately 8%7% of Western worldtotal produced alumina in 1994.1996 as reported by
the IPAI. During 1994,
KACC utilized1996, KACC's third party shipments of bauxite
represented approximately 80%25% of its bauxite production at its
alumina refineries and the remainder was either sold to third
parties or tolled into alumina by a third party.mined. In addition,
during 1994 KACC utilizedKACC's third party shipments of alumina represented approximately
29%73% of its alumina for
internal purposes and sold the remainder to third parties.produced. KACC's share of total Western world alumina
capacity as reported by the IPAI was approximately 8%6% in 1994.1996.

o The primary aluminum products business unit operates two
wholly-owned domestic smelters wholly owned by KACC and two foreign smelters in which
KACC holds significant ownership interests. In 1994, KACC
utilizedDuring 1996, KACC's
third party shipments of primary aluminum represented
approximately 46%75% of its primary aluminum for internal
purposes and sold the remainder to third parties.production. KACC's
share of total Western world primary aluminum capacity as reported by the
IPAI was approximately 3%2% in 1994.1996.

o Fabricated aluminum products are manufactured by threetwo business
units - flat-rolled products extrudedand engineered products. The
products and forgings -
which manufacture a variety of fabricatedinclude heat-treated products, (including 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) and operateproducts, which are manufactured at plants located in
principal marketing areas of the United States and Canada. Substantially
all of the primaryThe
aluminum utilized in KACC's fabricated products 3operations is
comprised of primary aluminum, obtained both internally and from
third parties, and scrap metal purchased from third parties.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (continued)

operations is obtained internally, with the balance of the metal
utilized in its fabricated products operations obtained from scrap
metal purchases.(CONTINUED)

Alumina
-------

The following table lists KACC's bauxite mining and alumina refining facilities
as of December 31, 1994:1996:

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

Bauxite Mining KJBC KJBC(1) Jamaica 49% 4,500,000 4,500,000
AlpartAlpart(2) Jamaica 65% 2,275,000 3,500,000
--------- --------------------- -------------
6,775,000 8,000,000
========= ===================== =============
Alumina Refining Gramercy Louisiana 100% 1,000,000 1,000,0001,050,000 1,050,000
Alpart Jamaica 65% 943,000942,500 1,450,000
QAL Australia 28.3% 934,000 3,300,000
--------- ---------
2,877,000 5,750,000
========= =========973,500 3,440,000
------------ -------------
2,966,000 5,940,000
============ =============

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

Bauxite mined in Jamaica by Kaiser Jamaica Bauxite Company
("KJBC")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.

KACC has entered into a series of medium-term
contracts for the supply of natural gas to the Gramercy plant.
The price of such gas varies based upon certain spot natural gas
prices. For 1995 KACC has, however, established a fixed price
for a portion of the delivered gas through a hedging program.

Alumina Partners of Jamaica ("Alpart")Alpart holds bauxite reserves and owns a 1,450,000 tons per year alumina plant
located in Jamaica. KACC hasowns a 65% interest in Alpart, and Hydro AluminiumAluminum 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 to a
capacity of 2,000,000 tons per year through the year 2024.

Alpart has entered into an agreement for the supply of
substantially all of its fuel oil through 1996. The balance of
Alpart's fuel oil requirements through 1996 will be purchased in
the spot market.

KACC holdsowns a 28.3% interest in Queensland Alumina Limited ("QAL"), which owns
the largest and one of the most efficient 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 pursuant to long-
termunder long-term tolling
contracts. The stockholders, including

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (continued) KACC, purchase bauxite from another QAL
stockholder pursuant tounder long-term supply contracts. KACC has contracted with QAL to
take approximately 751,000792,000 tons per year of capacity or pay standby charges.
KACC is unconditionally obligated to pay amounts calculated to service its
share ($78.794.4 million at December 31, 1994)1996) of certain debt of QAL, as well as
other QAL costs and expenses, including bauxite shipping costs.

QAL's annual
production capacity is approximately 3,300,000 tons, of which
approximately 934,000 tons are available to KACC.

KACC's principal customers for bauxite and alumina consist of large and small domestic and internationalother aluminum
producers that purchase bauxite and reduction-grade alumina, for use in their
internal refining and smelting operations and trading
intermediaries who resell raw materials to end-users. In 1994,end-users, and users of
chemical-grade alumina. All of KACC's third-party sales of bauxite in 1996 were
made to two customers, the largest of which accounted for approximately 79% of
such sales. KACC sold all of its bauxite to one customer, andalso sold alumina to 1215 customers, the largest and top five of
which accounted for approximately 19%21% and 82%79% of such sales, respectively. AmongSee
"-Competition." The Company believes that among alumina producers the Company believes KACC is now the
world's second largest seller of alumina to third parties. KACC's strategy is
to sell a substantial portion of the bauxite and alumina available to it in
excess of its internal refining and smelting requirements pursuant tounder multi-year
sales contracts. Marketing and sales efforts are conducted by executives of the
alumina business unit and KACC. See "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Trends
- Sensitivityalso "-Sensitivity to Prices and Hedging Programs."

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (CONTINUED)

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

The following table lists KACC's primary aluminum smelting facilities as of
December 31, 1994:1996:

Annual Rated Total 1996
Capacity Annual 1994Average
Company Available to Rated Operating
Location Facility Ownership the Company Capacity Rate
- ---------------------- ---------- ----------------------- ---------------- ----------- -------------- --------- ---------------------
(tons) (tons)

Domestic
Washington Mead 100% 200,000 200,000 80%106%
Washington Tacoma 100% 73,000 73,000 76%
-------- --------100%
----------- ----------
Subtotal 273,000 273,000
-------- ------------------- ----------
International
Ghana Valco 90% 180,000 200,000 70%68%
Wales, United Kingdom Anglesey 49% 55,000 112,000 113%
-------- --------118%
----------- ----------
Subtotal 235,000 312,000
----------- ----------
Total 508,000 585,000
=========== ==========

KACC owns two smelters located at Mead and Tacoma, Washington, where alumina is
processed into primary aluminum. The Mead facility uses pre-bake technology and
produces primary aluminum. Approximately 53% of Mead's 1996 production was used
at KACC's Trentwood fabricating facility 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 has also commenced
the modernization and expansion of the carbon baking furnace at its Mead
smelter at an estimated cost of approximately $52.0 million. The project is
expected to lower costs, enhance safety, and improve the environmental
performance of the facility, and is expected to be completed in late 1998.

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 expects to
continue to benefit from these savings in electric power costs at these
facilities in 1997 and beyond. However, a number of lawsuits challenging the
restructuring have been filed and the effect, if any, of such lawsuits on
KACC's power purchase and transmission arrangements is not known at this time.

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 long-term 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 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. The Volta River Authority has allocated to Valco sufficient
electric power to operate at 80% of its annual rated capacity through December
31, 1997.

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 and anodes that conduct electricity
through reduction cells, improved feed systems that add alumina to the cells,
and a computerized system that controls energy flow in the cells - has

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (CONTINUED)

significantly contributed to increased and more efficient production of primary
aluminum and enhances 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."

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 1996, KACC sold its primary aluminum production not utilized for internal
purposes to approximately 45 customers, the largest and top five of which
accounted for approximately 16% and 54% of such sales, respectively. See "-
Competition." Marketing and sales efforts are conducted by a small staff
located at the business unit's headquarters in Pleasanton, California, and by
senior executives of KACC who participate in the structuring of major sales
transactions. 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.

Flat-Rolled Products - The flat-rolled products business unit, the largest of
KACC's fabricated products businesses, operates the Trentwood sheet and plate
mill at Spokane, Washington. In addition, KACC broke ground on its first
commercial Micromill(TM) facility, near Reno, Nevada. The Micromill(TM) process
is a proprietary, compact, high-speed process for continuous casting and
rolling of a thin-strip aluminum sheet from molten metal. KACC expects the
Nevada facility to be in a start-up mode in the first half of 1997, and
anticipates beginning limited customer shipments from the facility by the
second half of 1997. See "-Research and Development."

The Trentwood facility is KACC's largest fabricating plant and accounted for
approximately 63% of KACC's 1996 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 implement changes to 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 has approved an expansion of its
heat-treat capacity to approximately 60,000 tons from approximately 45,000 tons,
which will enable KACC to increase the range of its heat-treat products,
including wide heat-treated sheet for the aerospace market, enhance the quality
of its heat-treated products, and improve Trentwood's operating efficiency. The
project is estimated to cost approximately $45.0 million and to take
approximately two years to complete. 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 are experiencing growth
in demand.

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. KACC
has made significant capital expenditures at Trentwood during the past several
years 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 1996, the business unit shipped products to approximately 150 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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (CONTINUED)

markets for flat-rolled products accounted for approximately 15% of the business
unit's revenue. In 1996, the flat-rolled products business unit had 42 domestic
and foreign can stock customers. The largest and top five of such customers
accounted for approximately 18% and 35%, respectively, of the business unit's
revenue. See "-Competition." The marketing staff for the flat-rolled products
business unit is located at the Trentwood facility and in Pleasanton,
California. Sales are made directly to end-use customers and distributors from
eight sales offices located throughout the United States. International
customers are served by sales offices in England and Japan and by independent
sales agents in Asia and Latin America.

Engineered Products - The engineered products business unit is headquartered in
Detroit, Michigan, and operates soft-alloy extrusion facilities in Los Angeles,
California; Santa Fe Springs, California; Sherman, Texas; and London, Ontario,
Canada; a cathodic protection business located in Tulsa, Oklahoma, that also
extrudes both aluminum and magnesium; rod and bar facilities in Newark, Ohio,
and Jackson, Tennessee, which produce screw machine stock, redraw rod, forging
stock, and billet; and a facility in Richland, Washington, which produces
seamless tubing in both hard and soft alloys for the automotive, other
transportation, export, recreation, agriculture, and other industrial markets.
Each of the soft-alloy extrusion facilities has fabricating capabilities and
provides finishing services. 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 sales and engineering office in Detroit, Michigan,
works with car makers and other customers, the Center for Technology (see "-
Research and Development"), and plant personnel to create new automotive
component designs and improve existing products.

The engineered products business unit also operates forging facilities at Erie,
Pennsylvania; Oxnard, California; and Greenwood, South Carolina; a machine shop
at Greenwood, South Carolina; and a casting facility in Canton, Ohio, and 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 1996, the engineered products business unit had 993 customers, the largest
and top five of which accounted for approximately 13% and 31%, respectively, of
the business unit's revenue. See "- Competition." Sales are made directly from
plants, as well as marketing locations across the United States.

In September 1996, KACC entered into a letter of intent with Accuride
Corporation ("Accuride"), a business unit of Phelps Dodge Corporation, to form
a joint-venture to design, manufacture and market aluminum wheels for the
commercial ground transportation industry. The formation of the joint venture,
subject to various conditions including third-party consents, is expected to
occur in the second quarter of 1997.

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.

12
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (CONTINUED)

Research and Development

KACC conducts research and development activities principally at two facilities
- - the Center for Technology ("CFT") in Pleasanton, California, and the Primary
Aluminum Products Division Technology Center ("DTC") adjacent to the Mead
smelter in Washington. Net expenditures for company-sponsored research and
development activities were $20.5 million in 1996, $18.5 million in 1995, and
$16.7 million in 1994. KACC's research staff totaled 156 at December 31, 1996.
KACC estimates that research and development net expenditures will be
approximately $21.6 million in 1997.

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. DTC
maintains specialized laboratories and a miniature carbon plant where
experiments with new anode and cathode technology are performed. DTC supports
KACC's primary aluminum smelters, and concentrates on the development of
cost-effective technical innovations such as equipment and process improvements.

The largest and most notable single project being developed at CFT and the
Reno, Nevada, facility is a unique Micromill(TM) casting facility for the
production of can sheet from molten metal using a continuous cast process. The
capital and conversion costs of the Company's Micromill(TM) facilities are
expected to be significantly lower than conventional rolling mills. The use of
a Micromill(TM) facility is also expected to result in lower transportation
costs due to the ability to strategically locate a Micromill(TM) facility in
close proximity to a manufacturing facility. Micromill(TM) facilities are
expected to be particularly well suited to take advantage of the rapid growth in
demand for can sheet expected in emerging markets in Asia and Latin America
where there is limited indigenous supply. KACC believes that Micromill(TM)
facilities should also be capable of manufacturing other sheet products at
relatively low capital and operating costs. The Micromill(TM) facility
technology is based on a proprietary thin-strip, high-speed, continuous-belt
casting technique linked directly to hot and cold rolling mills. The major
advantage of the process is that the sheet is continuously manufactured from
molten metal, unlike the conventional process in which the metal is first cast
into large, solid ingots and subsequently rolled into sheet through a series of
highly capital-intensive steps. The first Micromill(TM) facility, which was
constructed in Nevada during 1996 as a demonstration and production facility,
achieved operational start-up in the fourth quarter of 1996. KACC expects that
the Nevada Micromill(TM) facility will be in a start-up mode for the first half
of 1997 and will be able to commence limited shipments to customers in the
second half of 1997. If KACC is successful in proving and commercializing its
Micromill(TM) technology, Micromill(TM) facilities could represent an important
source of future growth. There can be no assurance that KACC will be able to
successfully develop and commercialize the technology for use at full-scale
facilities. KACC is currently financing the capital cost of the construction of
the Nevada Micromill(TM) facility, estimated to be approximately $70.0 million,
from available general corporate resources.

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, and the United Kingdom. KACC has technical services
contracts with smelters in Wales, Africa, Europe, the Middle East, and India.
KACC's revenue from technology sales and technical assistance to third parties
was $3.6 million in 1996, $5.7 million in 1995, and $10.0 million in 1994.

Business Development

KACC is actively pursuing opportunities to grow in targeted areas of its
portfolio, by internal investment and by acquisition, both domestically and
internationally. KACC is pursuing opportunities to increase its participation in
emerging markets by using its technical expertise and capital to form joint
ventures or acquire equity in aluminum-related facilities in foreign countries
where it can apply its proprietary technology. KACC has created Kaiser Aluminum
International to identify growth opportunities in targeted emerging markets and
develop the needed country competence to complement KACC's product and process
competence in capitalizing on such opportunities. KACC has focused its efforts
on countries that are expected to be important suppliers of aluminum and/or
large customers for aluminum and alumina, including Venezuela - where the
Company is the Qualified Operator in one of five consortia seeking to
participate in the privatization of Venezuela's aluminum industry - the PRC,
technology has been installed by KACC at various third party locations
throughout the world and is an integral part of KACC's initiatives for
participating in new and existing smelting facilities. See "-Research and
Development."

13
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (CONTINUED)

In 1995, Kaiser Yellow River Investment Limited ("KYRIL"), a subsidiary of the
Company, entered into a Joint Venture Agreement and related agreements (the
"Joint Venture Agreements") with the Lanzhou Aluminum Smelters ("LAS") of the
China National Nonferrous Metals Industry Corporation relating to the formation
and operation of Yellow River Aluminum Industry Company Limited, a Sino-foreign
joint equity enterprise organized under PRC law (the "Joint Venture"). KYRIL
contributed $9.0 million to the capital of the Joint Venture in July 1995. The
parties to the Joint Venture are currently engaged in discussions concerning
the future of the Joint Venture. Governmental approval in the PRC will be
necessary in order to implement any arrangements agreed to by the parties, and
there can be no assurance such approvals will be obtained. At a meeting of the
Board of Directors of the Joint Venture held on January 16, 1997, LAS reported
that negotiations had begun with an investor which might be interested in
buying KYRIL's interest in the Joint Venture. In light of such report, the
directors adopted a resolution that, among other things, (i) contained an
agreement to continue until June 30, 1997, discussions concerning the future of
the Joint Venture, (ii) provided that KYRIL granted to LAS the right to seek a
buyer to purchase KYRIL's equity interest in the Joint Venture, and (iii)
provided that if a buyer to purchase KYRIL's equity interest in the Joint
Venture was not found by June 30, 1997, the Joint Venture would be terminated
and dissolved.

KACC, through its engineered products business unit, entered into contracts to
form two small joint ventures in the PRC. KACC indirectly acquired equity
interests of approximately 45% and 49%, respectively, in these two companies
which will manufacture aluminum extrusions, in exchange for the contribution to
those companies of certain used equipment, technology, services and cash. The
majority equity interests in the two companies are owned by affiliates of
Guizhou Guang Da Construction Company.

Employees

During 1996, KACC employed an average of 9,567 persons, compared with an
average of 9,546 employees in 1995, and 9,744 employees in 1994. At December
31, 1996, KACC's work force was 9,509, including a domestic work force of
5,925, of whom 3,974 were paid at an hourly rate. Most hourly paid domestic
employees are covered by collective bargaining agreements with various labor
unions. Approximately 75% of such employees are covered by a master agreement
(the "Labor Contract") with the United Steelworkers of America ("USWA") 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 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 January 2, 1995,
were raised again effective November 6, 1995, and will be raised an additional
amount effective November 3, 1997, and an amount in respect of the cost of
living adjustment under the previous master agreement will be phased into base
wages during the term of the Labor Contract. In the second quarter of 1995,
KACC acquired up to $2,000 of preference stock held in a stock plan for the
benefit of certain employees covered by the Labor Contract and in the first
half of 1998 will acquire up to an additional $4,000 of such preference stock
held in such plan for the benefit of substantially the same employees. In
addition, a profitability test was satisfied and, therefore, KACC acquired
during 1996 up to an additional $1,000 of such preference stock held in such
plan for the benefit of substantially the same employees. KACC made comparable
acquisitions of preference stock held for the benefit of certain salaried
employees.

The contract covering Alpart's employees expired in April 1996, and contract
negotiations are ongoing.

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").

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (CONTINUED)

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. See "Legal Proceedings." 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
and Reauthorization Act of 1986 ("CERCLA"). 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. By letter dated June 18, 1996, the Washington State Department of
Ecology 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 1997. 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, 1996, the balance of such accruals, which are primarily included in
Long-term liabilities, was $33.3 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 to $9.0 million for the years
1997 through 2001 and an aggregate of approximately $6.0 million thereafter.
Cash expenditures of $8.8 million in 1996, $4.5 million in 1995, and $3.6
million in 1994 were charged to previously established accruals relating to
environmental costs. Approximately $9.3 million is expected to be charged to
such accruals in 1997.

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 $24.0 million
and that, subject to further regulatory review and approval, the factors upon
which a substantial portion of this estimate is based are expected to be
resolved over the next twelve months. 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 $18.4 million in
1996, $9.2 million in 1995, and $11.9 million in 1994. Annual operating costs
for pollution control, not including corporate overhead or depreciation, were
approximately $30.1 million in 1996, $26.0 million in 1995, and $23.1 million in
1994. Legislative, regulatory and economic uncertainties make it difficult to
project future spending for these purposes. However, the Company currently
anticipates that in the 1997-1998 period, environmental capital spending will be
within the range of approximately $6.0 million to $16.0 million per year, and
operating costs for pollution control will be within the range of $30.0 million
to $31.0 million per year. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Environmental Contingencies" in
the Annual Report. The portion of Note 8 of the Notes to Consolidated Financial
Statements in the Annual Report under the heading "Environmental 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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 2. PROPERTIES (CONTINUED)

efficiency, increase capacity, and achieve energy savings. The Company believes
that KACC's domestic 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" 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 United States
originally filed a cost recovery complaint (as amended, the "Complaint") in the
United States District Court for the Middle District of North Carolina,
Rockingham Division, No. C-89-231-R, which, as amended, includes KACC and a
number of other defendants. The Complaint seeks reimbursement for past and
future response costs and a determination of liability of the defendants under
Section 107 of CERCLA.

In 1993 and 1994, 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 addition to KACC, a number of other companies are also named as
respondents. KACC has entered into interim PRP Participation Agreements with
certain of the respondents (the "Group") to participate jointly in responding
to the Administrative Orders, to share costs incurred on an interim basis, and
to seek to reach a final allocation of costs through agreement or to allow such
final allocation and determination of liability to be made by the United States
District Court.

In March 1997, certain members of the Group, including KACC, entered into a
Settlement Agreement and Participation Agreement which allocates one hundred
percent of all costs incurred or to be incurred for work at each of the five
Sites. Negotiations with the United States Department of Justice ("DOJ") and
the EPA concerning an acceptable consent decree to resolve the outstanding
litigation in whole or in part commenced during the first quarter of 1997.
Based on current estimates of future costs, the Company believes that its
aggregate financial exposure at these Sites is less than $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 for the Eastern District of
Washington, Case No. C-89-106-CLQ. The complaint alleged 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 anticipates that capital
expenditures for the environmental upgrade of the furnace operation at its
Trentwood facility, including the improvements and changes required by the
Consent Decree, will be approximately $20.0 million.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------

ITEM 3. LEGAL PROCEEDINGS (CONTINUED)

Catellus Development Corporation v. Kaiser Aluminum & Chemical Corporation and
James L. Ferry & Son Inc.

In January 1991, the City of Richmond, et al. (the "Plaintiffs") filed a Second
Amended Complaint for Damages and Declaratory Relief against the United States,
Catellus Development Corporation ("Catellus") and other defendants
(collectively, the "Defendants") alleging, among other things, that the
Defendants caused or allowed hazardous substances, pollutants, contaminants,
debris and other solid wastes to be discharged, deposited, disposed of or
released on certain property located in Richmond, California (the "Property"),
formerly owned by Catellus and leased to KACC for the purpose of shipbuilding
activities conducted by KACC on behalf of the United States during World War
II. The Plaintiffs sought recovery of response costs and natural resource
damages under CERCLA. Certain of the Plaintiffs alleged that they had incurred
or expected to incur costs and damages of approximately $49.0 million. Catellus
subsequently filed a third party complaint (the "Third Party Complaint")
against KACC in the United States District Court for the Northern District of
California, Case No. C-89-2935 DLJ. Thereafter, the Plaintiffs filed a separate
complaint against KACC, Case No. C-92-4176. The Plaintiffs settled their CERCLA
and tort claims against the United States for $3.5 million plus thirty-five
percent (35%) of future response costs.

The trial involving this case commenced in March 1995. During the trial,
Plaintiffs settled their claims against Catellus in exchange for payment of
approximately $3.3 million. On December 7, 1995, the United States District
Court issued a final judgment on those claims concluding that KACC is liable
for various costs and interest, aggregating approximately $2.2 million, fifty
percent (50%) of future costs of cleaning up certain parts of the Property, and
certain fees and costs associated specifically with the claim by Catellus
against KACC. KACC paid the City of Richmond $1.8 million in partial
satisfaction of this judgment. In January 1996, Catellus filed a notice of
appeal with respect to its indemnity judgment against KACC. KACC has since
filed a notice of cross appeal as to the Court's decision adjudicating that
KACC is obligated to indemnify Catellus. On July 8, 1996, the Court issued an
order awarding Plaintiffs nominal costs, which amount has been paid. The order
also awarded Catellus de minimis costs. Catellus has filed a notice of appeal.
On August 12, 1996, the Court issued an order granting the Catellus motion for
attorneys' fees in the amount of approximately $.9 million. KACC and Catellus
have filed notices of appeal with respect to the attorneys' fees award.

Waste Inc. Superfund Site

On December 8, 1995, the EPA issued a unilateral Administrative Order for
Remedial Design and Remedial Action under CERCLA to KACC and thirty-one other
respondents for remedial design and action at the Waste Inc. Superfund Site at
Michigan City, Indiana. This site was operated as a landfill from 1965 to 1982.
KACC is alleged to have arranged for the disposal of waste from its
formerly-owned plant at Wanatah, Indiana, during the period from 1964 to 1972.
In May 1996, KACC entered into a Participation Agreement with thirteen of the
respondents to perform the work required under the Administrative Order, under
which KACC will pay 2.79% of the cost of remedial design and work at the Site.
Based on current cost estimates, KACC believes that its financial exposure for
remedial design and remedial action at this site is less than $.5 million.

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, Case No. BC145612. The complaint claims that the
defendants conspired, in violation of the California Cartwright Act (Bus. &
Prof. Code ss.16720 & 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.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 3. LEGAL PROCEEDINGS (CONTINUED)

Matheson et al v. Kaiser Aluminum Corporation et al

On March 19, 1996, a lawsuit was filed against MAXXAM, the Company, and the
Company's directors challenging and seeking to enjoin a proposed
recapitalization of the Company (the "Proposed Recapitalization") and the April
10, 1996, special stockholders meeting at which the Proposed Recapitalization
was to be considered. The suit, which is entitled Matheson et al. v. Kaiser
Aluminum Corporation et al. (No. 14900) and was filed in the Delaware Court of
Chancery, alleges, among other things, breaches of fiduciary duties by certain
defendants and that the Proposed Recapitalization violates Delaware law and the
certificate of designations for the Company's 8.255% PRIDES, Convertible
Preferred Stock (the "PRIDES"). On April 8, 1996, the Delaware Court of
Chancery issued a ruling which preliminarily enjoined the Company from
implementing the Proposed Recapitalization. On April 19, 1996, the Delaware
Supreme Court granted the Company's motion to consider, on an expedited basis,
the Company's appeal of the preliminary injunction and on May 1, 1996, the
Company's stockholders approved the Proposed Recapitalization which was not
implemented at that time due to the pending appeal. On August 29, 1996, the
Delaware Supreme Court upheld the preliminary injunction and remanded the case
to the Court of Chancery. On September 24, 1996, the plaintiffs filed a motion
to make permanent the temporary injunction issued on April 8, 1996. On
September 27, 1996, the Board of Directors of the Company adopted a resolution
abandoning the Proposed Recapitalization. On October 2, 1996, the Company filed
a motion in the Delaware Court of Chancery to dismiss the shareholder
litigation relating to the Proposed Recapitalization on the ground of mootness
and filed a response to plaintiffs' motion for entry of a permanent injunction.
Thereafter, plaintiffs' attorneys filed their fee application, and briefing was
submitted by both sides on whether a permanent injunction was needed, and the
amount of the fee to which plaintiffs' attorneys were entitled. On March 18,
1997, plaintiffs withdrew their motion for a permanent injunction, leaving their
fee application as the only issue for the Court of Chancery to consider. After
oral argument on March 25, 1997, the Court of Chancery awarded plaintiffs'
attorneys fees and expenses in the total amount of $.8 million. It is
anticipated that the Court of Chancery will sign an order, approved as to form
by all parties, awarding such fees, dissolving the preliminary injunction, and
dismissing plaintiffs' case with prejudice. The decision to abandon the
Proposed Recapitalization does not preclude a recapitalization from being
proposed to the stockholders of the Company in the future.

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 15 years. For additional
information, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Asbestos Contingencies" in the Annual Report. The
portion of Note 8 of the Notes to Consolidated Financial Statements in the
Annual Report under the heading "Asbestos Contingencies" is incorporated
herein by reference.

DOJ Proceedings

On August 24, 1994, the DOJ issued Civil Investigative Demand No. 11356 ("CID
No. 11356") requesting information from the Company regarding (i) its
production, capacity to produce, and sales of primary aluminum from January 1,
1991, to the date of the response; (ii) any actual or contemplated reduction in
its production of primary aluminum during that period; and (iii) any
communications with others regarding any actual, contemplated, possible or
desired reductions in primary aluminum production by the Company or any of its
competitors during that period. The Company's management believes that the
Company's actions have at all times been appropriate, and the Company has
submitted documents and interrogatory answers to the DOJ responding to CID No.
11356.

On March 27, 1995, the DOJ issued Civil Investigative Demand No. 12503 ("CID
No. 12503"), as part of an industry-wide investigation, requesting information
from KACC regarding (i) any actual or contemplated changes in its method of
pricing can sheet from January 1, 1994, through March 31, 1995, (ii) the
percentage of aluminum scrap and primary aluminum ingot used by KACC to produce
can sheet and the manner in which KACC's cost of acquiring aluminum scrap is
factored into its can sheet prices, and (iii) any communications with others
regarding any actual or contemplated changes in its method of pricing can sheet
from January 1, 1994, through March 31, 1995. Management believes that KACC's
actions have at all times been appropriate, and KACC has submitted documents
and interrogatory answers to the DOJ responding to CID No. 12503. KACC was
informed in November 1996 that the DOJ has officially closed its investigation
and has returned the documents submitted by KACC.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------

ITEM 3. LEGAL PROCEEDINGS (CONTINUED)

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 1996.

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 14, 1997, was 160. Page 48 of the Annual Report, and the information in
Note 4 of the Notes to Consolidated Financial Statements under the heading
"Loan Covenants and Restrictions" at pages 29-30 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 4.8 through 4.16 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 4.7 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 4.16 to this Report, Note 4 of the Notes to Consolidated Financial
Statements at pages 29-30 of the Annual Report, and the information under the
headings "Financing Activities and Liquidity" and "Capital Structure" at pages
17-18 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 3 of this Report, to the table at page 12 of the Annual
Report,to Note 1 of the Notes to Consolidated Financial Statements at pages
25-27 of the Annual Report, and to pages 46-47 of the Annual Report.

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

Pages 12-20 of the Annual Report are incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Pages 21-45 and page 48 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.

19
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------

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 21-45 and 48 of the Annual Report.

2. Financial Statement Schedules.............................Page
----------------------------- ----
Report of Independent Public Accountants...................17

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 ...........................18-21

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 23), which
index is incorporated herein by reference.

(b) REPORTS ON FORM 8-K

Three Reports on Form 8-K were filed by the Company during the
last quarter of the period covered by this Report. One Report on
Form 8-K, dated October 2, 1996, stated that the Board of
Directors of the Company had adopted a resolution abandoning a
proposed recapitalization of the Company, and contained
information concerning an action entitled Matheson et al. v.
Kaiser Aluminum Corporation et al. One Report on Form 8-K, dated
October 10, 1996, stated that on October 7, 1996, KACC announced
in a press release that it proposes to make a Rule 144A offering
of $175 million principal amount of senior notes due 2006. One
Report on Form 8-K, dated October 23, 1996, stated that on
October 17, 1996, KACC announced in a press release that it had
priced its Rule 144A offering of $175 million principal amount of
10 7/8% Senior Notes due 2006 at 99.5% of their principal amount
to yield 10.96% to maturity.

Reference is made to the Index of Exhibits immediately preceding
the exhibits hereto (beginning on page 23), which index is
incorporated herein by reference.

16
20

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

We have audited in accordance with generally accepted auditing standards, the
financial statements included in Kaiser Aluminum Corporation and subsidiaries'
annual report to shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated February 14, 1997. 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 14, 1997

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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SCHEDULE I
CONDENSED BALANCE SHEETS - PARENT COMPANY

(In millions of dollars, except share amounts)

December 31,
--------------------
1996 1995
-------- --------

508,000 585,000
ASSETS
Current assets:
Cash and cash equivalents $ $ .2
Note receivable from KACC 8.6 10.7
-------- --------
Total current assets 8.6 10.9

Note receivable from KACC 8.6

Investment in KACC 1,641.2 1,521.3
-------- --------

Total $1,649.8 $1,540.8
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 2.4 $ 3.3

Intercompany note payable to KACC, owns two smelters located at Meadincluding accrued interest 1,578.1 1,479.8

Stockholders' equity:
PRIDES Convertible, par value $.05, issued and Tacoma, Washington, where
alumina is processed into primary aluminum. The Mead facility uses
pre-bake technologyoutstanding, 8,673,850 .4 .4
Common stock, par value $.01, authorized 100,000,000 shares: issued and
produces primary aluminum, almost alloutstanding 71,646,789 and 71,638,514 in 1996 and 1995 .7 .7
Additional capital 531.1 530.3
Accumulated deficit (460.1) (459.9)
Additional minimum pension liability (2.8) (13.8)
-------- --------
Total stockholders' equity 69.3 57.7
-------- --------

Total $1,649.8 $1,540.8
======== ========

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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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SCHEDULE I
CONDENSED STATEMENTS OF INCOME - PARENT COMPANY

(In millions of dollars)

December 31,
-----------------------------
1996 1995 1994
------- ------- -------

Equity in income (loss) of which isKACC $ 108.7 $ 152.8 $ (20.4)

Administrative and general expenses (2.2) (.4) (.3)

Interest expense (98.3) (92.1) (86.1)
------- ------- -------
Net income (loss) $ 8.2 $ 60.3 $(106.8)
======= ======= =======

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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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SCHEDULE I
CONDENSED STATEMENTS OF CASH FLOWS - PARENT COMPANY

(In millions of dollars)

December 31,
-----------------------------
1996 1995 1994
------- ------- -------

Cash flows from operating activities:
Net income (loss) $ 8.2 $ 60.3 $(106.8)
Adjustments to reconcile net income (loss) to net cash provided by
(used for) operating activities:
Equity in (income) loss of KACC (108.7) (152.8) 20.4
Accrued interest on intercompany note payable to KACC 98.3 92.1 86.1
Increase (decrease) in current liabilities (.9) .2 .3
------- ------- -------
Net cash used at KACC's Trentwood fabricating facility and the
balance of which is sold to third parties. The Tacoma plant uses
Soderberg technology and produces primary aluminum and high-grade,
continuous-cast, redraw rod, which currently commands a premium
pricefor operating activities (3.1) (.2)
------- ------- -------

Cash flows from investing activities:
Investment in excess of the price of primary aluminum. Both smelters
have achieved significant production efficiencies in recent years
through retrofit technology, cost controls, and semi-variable
wage and power contracts, leading to increases in production
volume and enhancing their ability to compete with newer smelters.
At the Mead plant, KACC has converted to welded anode assemblies
to increase energy efficiency, extended the anode life-cycle in
the smelting process, changed(.1) (1.2) (66.9)
------- ------- -------
Net cash used for investing activities (.1) (1.2) (66.9)
------- ------- -------

Cash flows from pencil to liquid pitch to
produce carbon anodes which achieved environmental and operating
savings, and engaged in efforts to increase production through the
use of improved, higher-efficiency reduction cells.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
------------------------------------------------------------------

ITEM 1. BUSINESS (continued)

Electrical power represents an important production cost forfinancing activities:
Dividends paid (10.5) (20.8) (14.8)
Capital stock issued .1 1.2 100.1
Intercompany note issued by KACC at
its Mead and Tacoma smelters. The basic electricity supply contract
between the Bonneville Power Administration (the "BPA") and KACC
expires in 2001. The electricity contracts between the BPA and its
direct service industry customers (which consist of 15 energy
intensive companies, principally aluminum producers, including KACC)
permit the BPA to interrupt up to 25% of the amount of power which
it normally supplies to such customers. KACC has operated its Mead
and Tacoma smelters in Washington at approximately 75% of their
full capacity since January 1993, when three reduction potlines were
removed from production (two at its Mead smelter and one at its
Tacoma smelter) in response to a power reduction imposed- net 13.4 15.5 (13.2)
------- ------- -------
Net cash (used for) provided by the BPA.
Although full BPA power was restored as of April 1, 1994, a 25%
power reduction was imposed again by the BPA as of August 1, 1994,
which reduction continued through November 30, 1994. Full BPA
power was restored on December 1, 1994, and the BPA has stated
that it expects to be able to provide full service through November
30, 1995. KACC has operated its Trentwood fabrication facility
without curtailment of its production.

Through June 1996, KACC pays for power on a basis which varies,
within certain limits, with the market price of primary aluminum,
and thereafter KACC will pay for power at rates to be negotiated.
Effective October 1, 1993, anfinancing activities 3.0 (4.1) 72.1
------- ------- -------

Net (decrease) increase in cash and cash equivalents during the base rate the BPA
charged to its direct service industry customers for electricity was
adopted,year (.2) (5.5) 5.2
Cash and that rate is expected to remain in effect through
September 1995. In February 1995, the BPA issued an initial rate
increase announcement which proposed a 5.4% increase to the direct
service industry customers. If the proposed increase becomes
effective, it would increase production costscash equivalents at the Meadbeginning of year .2 5.7 .5
------- ------- -------
Cash and Tacoma
smelters by approximately $5.0 million per year based on the current
operating rate of those smelters. A rate increase could take effect
as early as October 1995; however, there is no certainty that the
proposed rate increase, or any rate increase, will become effective
in October 1995 orcash equivalents at any later time.

KACC manages, and holds 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 long-term
tolling contracts which provide for proportionate payments by the
participants in amounts intended to pay not less than all of Valco's
operating and financing costs. KACC's share of the primary aluminum
is sold to third parties. Power for the Valco smelter is supplied
under an agreement which expires in 2017. The agreement indexes
two-thirds of the price of the contract quantity 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. Valco has entered into an agreement
with the government of Ghana under which Valco has been assured
(except in cases of force majeure) that it will receive sufficient
electric power to operate at its current level of three and one-
half potlines through December 31, 1996. Management believes that
with normal rainfall during 1995 and 1996, Valco should have
available sufficient electric power to operate at its current level
during 1995 and 1996.

KACC has 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 technology in
all of its smelters. This technology - which includes the redesign
of the cathodes and anodes that conduct electricity through
reduction cells, improved "feed" systems that add alumina to the
cells, and a computerized system that controls energy flow in the
cells - enhances 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."

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (continued)

KACC sold its primary aluminum production not utilized for internal
purposes to approximately 35 customers, the largest and top five of
which accounted for approximately 25% and 68% of such sales,
respectively. Marketing and sales efforts are conducted by a small
staff located at the business unit's headquarters in Pleasanton,
California, and by senior executives of KACC who participate in the
structuring of major sales transactions. A majority of the business
unit's sales are based upon long-term relationships with metal
merchants and end-users. See "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Trends -
Sensitivity to Prices and Hedging Programs."

Fabricated Aluminum Products
----------------------------

KACC manufactures and markets fabricated aluminum products for the
packaging, transportation, 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, both domestic and foreign. In 1994, seven domestic
beverage container manufacturers constituted the leading customers
for KACC's fabricated products and accounted for approximately
17% of the Company's sales revenue.

KACC's fabricated products compete with those of numerous domestic
and foreign producers and with products made with 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 refocused its fabricated
products operations to concentrate on selected products in which
KACC has production expertise, high quality capability, and
geographic and other competitive advantages. See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - Trends - Sensitivity to Prices and Hedging Programs."

Flat-Rolled Products - The flat-rolled products business unit, the
largest of KACC's fabricated products businesses, operates the
Trentwood sheet and plate mill at Spokane, Washington. The
Trentwood facility is KACC's largest fabricating plant and
accounted for substantially more than one-half of KACC's 1994
fabricated aluminum products shipments. The business unit supplies
the beverage container market (producing body, lid, and tab stock),
the aerospace market, and the tooling plate, heat-treated alloy and
common alloy coil markets, both directly and through distributors.
KACC announced in October 1993 that it was restructuring its flat-
rolled products operation at its Trentwood plant to reduce that
facility's annual operating costs. The Trentwood restructuring is
expected to result in annual cost savings of at least $50.0 million
after it has been fully implemented (which is expected to occur by
the end of 1995).

KACC's flat-rolled products are sold primarily to beverage container
manufacturers locatedyear $ $ .2 $ 5.7
======= ======= =======

Supplemental disclosure of non-cash investing activities:
Non-cash investment 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 and timeliness of delivery are the
primary bases on which KACC competes. Management believes that
KACC's capital improvements at Trentwood 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 1994, the flat-rolled products business unit had 25 foreign and
domestic can stock customers, the majority of which were beverage
can manufacturers (including five of the six major domestic
beverage can manufacturers) and the balance of which were brewers.
The largest and top five of such customers accounted for
approximately 26% and 51%, respectively, of the business unit's
sales revenue. In 1994, the business unit shipped products to over
200 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 13% of
the business unit's sales revenue. The marketing staff for the
flat-rolled products business unit is located at the Trentwood
facility and in Pleasanton, California. Sales are made directly to
customers (including distributors) from eight sales offices located
throughout the United States. International customers are served
by sales offices in the Netherlands and Japan and by independent
sales agents in Asia and Latin America.

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ITEM 1. BUSINESS (continued)

Extruded Products - The extruded products business unit is
headquartered in Dallas, Texas, and operates soft-alloy extrusion
facilities in Los Angeles, California; Santa Fe Springs, California;
Sherman, Texas; and London, Ontario, Canada; a cathodic protection
business located in Tulsa, Oklahoma, that also extrudes both
aluminum and magnesium; rod and bar facilities in Newark, Ohio, a
facility in Jackson, Tennessee, which produce screw machine stock,
redraw rod, forging stock, and billet, and a facility in Richland,
Washington, which is expected to be in full operation in the second
quarter of 1995 and which will produce seamless tubing in both hard
and soft alloys for the automotive, other transportation, export,
recreation, agriculture, and other industrial markets. Each of the
soft-alloy extrusion facilities has fabricating capabilities and
provides finishing services.

The extruded products business unit's major markets are in the
transportation industry, to which it provides extruded shapes for
automobiles, trucks, trailers, cabs, and shipping containers, and
distribution, durable goods, defense, building and construction,
ordnance, and electrical markets. In 1994, the extruded products
business unit had over 950 customers for its products, the largest
and top five of which accounted for approximately 6% and 20%,
respectively, of its sales revenue. Sales are made directly from
plants as well as marketing locations across the United States.

Forgings - The forgings business unit operates forging facilities at
Erie, Pennsylvania; Oxnard, California; and Greenwood, South
Carolina; and a machine shop at Greenwood, South Carolina. The
forgings 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 aluminum make it particularly well suited for
automotive applications.

In 1994, the forgings business unit had over 300 customers for its
products, the largest and top five of which accounted for
approximately 30% and 69%, respectively, of the forgings business
unit's sales revenue. The forgings business unit's headquarters is
located in Erie, Pennsylvania, and additional sales, marketing, and
engineering groups are located in the midwestern and western United
States.

Competition

Aluminum products compete in many markets with steel, copper, glass,
plastic, and numerous other materials. 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 of Australia Ltd., Glencore Ltd., and
Pechiney S.A. 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 KACC has production expertise, high
quality capability, and geographic and other competitive advantages.
Management 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 business or operations.

Research and Development

KACC conducts research and development activities principally at
four facilities - the Center for Technology ("CFT") in Pleasanton,
California; the Primary Aluminum Products Division Technology Center
("DTC") adjacent to the Mead smelter

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (continued)

in Washington; the Alumina Development Laboratory ("ADL") at the
Gramercy, Louisiana refinery, which is a part of Kaiser Alumina
Technical Services ("KATS"), and the Automotive Product Development
Office located near Detroit, Michigan. Net expenditures for
Company-sponsored research and development activities were $16.7
million in 1994, $18.5 million in 1993, and $13.5 million in 1992.
KACC's research staff totaled 166 at December 31, 1994. KACC
estimates that research and development net expenditures will be in
the range of approximately $20.0 - $22.0 million in 1995.

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. A significant effort is
directed at the automotive market. One project directed at
automotive sheet development is carried out cooperatively with
Furukawa Electric Co., Ltd. of Japan, Pechiney Rhenalu of France,
and Kawasaki Steel Corporation of Japan. The largest and most
notable single project being developed at CFT is a "micromill"
process for producing can body sheet. A pilot facility has been
constructed and operated at CFT. Based on the results achieved so
far, the Company hopes to finalize in 1995 plans for construction
of a full-scale commercial micromill.

DTC maintains specialized laboratories and a miniature carbon plant
where experiments with new anode and cathode technology are
performed. DTC supports KACC's primary aluminum smelters, and
concentrates on the development of cost-effective technical
innovations such as equipment and process improvements. KATS,
including ADL, provides improved alumina process technology to KACC
facilities and technical support to new business ventures in
cooperation with KACC's international business development group.
The Automotive Product Development Office is a sales and application
engineering facility located near Detroit-area carmakers and works
with customers, CFT and plant personnel to create new automotive
component designs and improve existing products.

KACC is actively engaged in efforts to license its technology and
sell technical and managerial assistance to other producers
worldwide. Pursuant to various arrangements, 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, Europe, and
the United Kingdom. KACC's technology sales and revenue from
technical assistance to third parties were $10.0 million in 1994,
$12.8 million in 1993, and $14.1 million in 1992.

KACC has entered into agreements with respect to the Krasnoyarsk
smelter located in Russia pursuant to which KACC has licensed
certain of its technology for use in such facility and agreed to
provide purchasing services in obtaining Western-sourced
technology and equipment to be used in such facility. These
agreements were entered into in November 1990, and the services
under them are expected to be completed in 1996. In addition,
KACC has entered into agreements with respect to the Nadvoitsy
smelter located in Russia and the Korba smelter of the Bharat
Aluminum Co. Ltd., located in India, pursuant to which KACC
has licensed certain of its technology for use in such facilities.
The agreements relating to the Nadvoitsy and Korba smelters were
entered into in 1993 and the services under such agreements are
expected to be completed in 1995.

Employees

During 1994, KACC employed an average of 9,744 persons, compared
with an average of 10,220 employees in 1993, and 10,130 employees
in 1992. At December 31, 1994, KACC's work force was 9,468,
including a domestic work force of 5,812, of whom 3,978 were paid
at an hourly rate. Most hourly paid domestic employees are covered
by collective bargaining agreements with various labor unions.
Approximately 71% of such employees are covered by a master
agreement (the "Labor Contract") with the United Steelworkers of
America ("USWA") which expires on September 30, 1998. The Labor
Contract covers KACC's plants in Spokane (Trentwood and Mead) and
Tacoma, Washington; Gramercy, Louisiana; and Newark, Ohio.

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ITEM 1. BUSINESS (continued)

The Labor Contract provides for base wages at all covered plants.
In addition, workers covered by the Labor Contract may receive
quarterly bonus payments based on various indices of profitability,
productivity, efficiency, and other aspects of specific plant
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 January 2, 1995, and will be raised an
additional amount effective November 6, 1995, and November 3, 1997,
and an amount in respect of the cost of living adjustment under the
previous master agreement will be phased into base wages during the
term of the Labor Contract. In the second quarter of 1995, KACC
will acquire up to $2,000 of preference stock held in a stock plan
for the benefit of each of approximately 82% of the employees
covered by the Labor Contract and in the first half of 1998 up to
an additional $4,000 of such preference stock held in such plan for
the benefit of substantially the same employees. In addition,
if a profitability test is satisfied, KACC will acquire during
1996 or 1997 up to an additional $1,000 of such preference stock
held in such plan for the benefit of substantially the same
employees. KACC will make comparable acquisitions of preference
stock held for the benefit of each of certain salaried employees.
Management considers KACC's employee relations to be satisfactory.

See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Trends - Labor Matter."

Environmental Matters

The Company and KACC are subject to a wide variety of international,
state, and local environmental laws and regulations ("Environmental
Laws") which continue to be adopted and amended. 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").

KACC's Mead, Washington, facility has been listed on the National
Priorities List under CERCLA. In addition, in connection with
certain of its asset sales, KACC has indemnified the purchasers of
assets with respect to certain liabilities (and associated expenses)
resulting from acts or omissions arising prior to such dispositions,
including environmental liabilities. 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, management currently believes that the resolution of such
uncertainties should not have a material adverse effect on the
Company's consolidated financial position or results of operations.

Environmental capital spending was $11.9 million in 1994, $12.6
million in 1993, and $13.1 million in 1992. Annual operating costs
for pollution control, not including corporate overhead or
depreciation, were approximately $23.1 million in 1994, $22.4
million in 1993, and $21.6 million in 1992. Legislative,
regulatory, and economic uncertainties make it difficult to project
future spending for these purposes. However, the Company currently
anticipates that in the 1995-1996 period, environmental capital
spending will be within the range of approximately $15.0 - $18.0
million per year, and operating costs for pollution control will be
within the range of $25.0 - $27.0 million per year. In addition,
$3.6 million

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 1. BUSINESS (continued)

in cash expenditures in 1994, $7.2 million in 1993, and $9.6 million
in 1992 were charged to previously established reserves relating
to environmental costs. Approximately $11.4 million is expected
to be charged to such reserves in 1995.

See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Financial Condition and Capital Spending -
Environmental Contingencies." The portion of Note 9 of the Notes to
Consolidated Financial Statements contained in the Annual Report
under the heading "Environmental 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 "ITEM 1. BUSINESS," 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.
Management believes that KACC's domestic plants are cost competitive
on an international basis. Due to KACC's variable cost structure,
the plants' operating costs are relatively lower in periods of low
primary aluminum prices and relatively higher in periods of high
primary aluminum prices.

KACC's obligations under the Credit Agreement entered into on
February 17, 1994, as amended (the "1994 Credit Agreement"), are
secured by, among other things, mortgages on KACC's major domestic
plants (other than the Gramercy alumina plant). See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - Financial Condition and Capital Spending."

ITEM 3. LEGAL PROCEEDINGS

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. These sites (collectively, the
"Sites") include the Farm Chemicals Site, Twin Sites, Fairway Six
Site, McIver Dump Site and the Route 211 Site. 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-
1930s through the late 1980s.

The United States originally filed a cost recovery complaint (as
amended, the "Complaint") in the United States District Court for
the Middle District of North Carolina, Rockingham Division, No.
C-89-231-R, against five defendants on March 31, 1989, and
subsequently amended its complaint to add another ten defendants
on February 6, 1991, and another four defendants on August 1, 1991.
Neither the Company nor KACC were defendants named in the Complaint.
The Complaint seeks reimbursement for past and future response
costs and a determination of liability of the defendants under
Section 107 of CERCLA. On or about October 2, 1991, KACC, along
with approximately 17 other parties, was served with third party
complaints from four of the defendants named in the Complaint (the
"Third Party Plaintiffs") alleging claims arising under various
theories of contribution and indemnity. On October 22, 1992, the
United States filed a motion for leave to file an amended complaint
naming KACC as a first party defendant in its cost recovery action.
On February 16, 1993, the court granted that motion.

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ITEM 3. LEGAL PROCEEDINGS (continued)

The EPA has performed a Remedial Investigation/Feasibility Study and
issued a Record of Decision ("ROD") dated September 30, 1991, for
the Sites. The major remedy selected for the Sites in the ROD
consisted of excavation of contaminated soil, treatment of the
contaminated soil at a single location utilizing thermal treatment,
and placement of the treated material back into the areas of
excavation. The estimated cost of such remedy for the Sites is
approximately $32 million. Other possible remedies described in
the ROD included on-site incineration and on-site ash disposal at
an estimated cost of approximately $53 million, and off-site
incineration and disposal at an estimated cost of approximately
$222 million. The EPA has stated that it has incurred past costs
at the Sites in the range of $7.5 - $8 million as of February 9,
1993, and alleges that response costs will continue to be incurred
in the future.

On May 20, 1993, the EPA issued three unilateral Administrative
Orders under Section 106(a) of CERCLA ordering the respondents,
including KACC, to perform the remedial design and remedial action
described in the ROD for the Farm Chemicals Site (EPA Docket No. 93-
13-C), Twin Sites (EPA Docket No. 93-14-C) and Fairway Six Site (EPA
Docket No. 93-15-C). The estimated cost as set forth in the ROD for
the remedial action at the three Sites is approximately $27 million.
In addition to KACC, respondents named in the Administrative Orders
for all three Sites include J. M. Taylor, Grower Service Corporation,
E. I. DuPont de Nemours & Co., Olin Corporation, UCI Holdings, Inc.,
PPG Industries, Inc., and Union Carbide Corporation. Ciba-Geigy
Corporation, Hercules, Inc., Mobil Oil Corporation, Shell Oil
Company, The Boots Company (USA), Inc., Nor-Am Chemical Co., George
D. Anderson, Farm Chemicals, Inc., Partners In The Pits, Ltd., Dan F.
Maples, Pits Management Corp., Maples Golf Construction, Inc., Yadco
of Pinehurst, Inc., and Robert Trent Jones are named as respondents
for one or two of the Sites.

KACC has entered into a PRP Participation Agreement with certain of
the respondents to participate jointly in responding to the
Administrative Orders dated May 20, 1993, regarding soil remediation,
to share costs incurred on an interim basis, and to seek to reach a
final allocation of costs through agreement or to allow such final
allocation and determination of liability to be made by the United
States District Court. By letter dated July 6, 1993, KACC has
notified the EPA of its ongoing participation with such group of
respondents which, as a group, are intending to comply with the
Administrative Orders to the extent consistent with applicable law.
By letters dated December 30, 1993, the EPA notified KACC of its
potential liability for, and requested that KACC, along with certain
other named companies, undertake or agree to finance, groundwater
remediation at certain of the Sites.

On June 22, 1994, the EPA issued two Unilateral Administrative
Orders under Section 106(a) of CERCLA under U.S. EPA Docket No.
94-28-C and U.S. EPA Docket No. 94-27-C, respectively, ordering
the named respondents to design and implement the groundwater
remediation remedy for the Farm Chemicals and Twin Sites and for
the Fairway Six Site. In addition to KACC, the Unilateral
Administrative Order for the Farm Chemicals and Twin Site areas
named as respondents J. M. Taylor, Grower Service Corporation, Farm
Chemicals, Inc., E. I. Dupont de Nemours and Company, Olin
Corporation, UCI Holdings, Inc., Union Carbide Corporation, Miles,
Inc., Mobil Oil Corporation, Shell Oil Company, Hercules, Inc., The
Boots Company (USA), Inc., Nor-Am Chemical Company, and Ciba-Geigy
Corporation. Named as respondents in addition to KACC for the
Fairway Six Site area were J. M. Taylor, George Anderson, Grower
Service Corporation, Partners in the Pits, Dan Maples, Pits
Management Corporation, Maples Golf Construction, Inc.,
Yadco of Pinehurst Inc., Robert Trent Jones, E. I. Dupont de Nemours
and Company, Olin Corporation, UCI Holdings, Inc., and Ciba-Geigy
Corporation. The ROD-selected remedy for the groundwater
remediation selected by the EPA includes extraction, on site
treatment by coagulation, flocculation, precipitation, air
stripping, GAC absorption, and discharge on site for the Farm
Chemicals/Twin Sites and extraction, on-site treatment by GAC
absorption and discharge on-site for the Fairway Six Site. The EPA
has estimated the total present worth cost, including 30 years of
operation and maintenance, at $11,849,757. A definitive PRP
Participation Agreement with respect to groundwater remediation
is under negotiation among certain of the respondents, including
KACC, and these respondents are proceeding with work required
under the administrative orders.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 3. LEGAL PROCEEDINGS (continued)

Based upon the information presently available to it, the Company is
unable to determine whether KACC has any liability with respect to
any of the Sites or, if there is any liability, the amount thereof.
Two government witnesses have testified that KACC acquired pesticide
products from the operator of the formulation site over a two to
three year period. KACC has been unable to confirm the accuracy of
this testimony.

United States of America v. Kaiser Aluminum & Chemical Corporation

On February 8, 1989, a civil action was filed by the United States
Department of Justice at the request of the EPA against KACC in the
United States District Court for the Eastern District of Washington,
Case No. C-89-106-CLQ. The complaint alleged 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. The complaint sought injunctive
relief, including an order that KACC take all necessary action to
achieve compliance with the Washington SIP opacity limit and the
assessment of civil penalties of not more than $25,000 per day.

In the course of the litigation, questions arose as to whether the
observers who recorded the alleged exceedances were qualified under
the Washington SIP to read opacity. In July 1990, KACC and the
Department of Justice agreed to a voluntary dismissal of the action.
At that time, however, the EPA had arranged for increased
surveillance of the Trentwood facility by consultants and the EPA's
personnel. From May 1990 through May 1991, these observers recorded
approximately 130 alleged exceedances of the SIP opacity rule.
Justice Department representatives have stated their intent to file
a second lawsuit against KACC based on the opacity observations
recorded during that period.

The second lawsuit has not yet been filed. Instead, KACC has
entered into negotiations with the EPA to resolve the claims
against KACC through a consent decree. The EPA and KACC have made
substantial progress in negotiating the terms of the consent
decree. The terms of the consent decree currently being negotiated
include, in principle, a commitment by KACC to improve emission
control equipment at the Trentwood facility and a civil penalty
assessment against KACC. The Company anticipates that agreement
upon the terms of a consent decree will be reached during 1995.
In the event the terms of a consent decree are not agreed upon,
the matter would likely be resolved in federal court.

Catellus Development Corporation v. Kaiser Aluminum & Chemical
Corporation and James L. Ferry & Son, Inc.

On January 7, 1991, the City of Richmond, et al. (the "Plaintiffs")
filed a Second Amended Complaint for Damages and Declaratory Relief
against the United States of America, the United States Maritime
Administration and Santa Fe Land Corporation (now known as Catellus
Development Corporation ("Catellus")) (collectively, the
"Defendants") alleging, among other things, that the Defendants
caused or allowed hazardous substances, pollutants, contaminants,
debris, and other solid wastes to be discharged, deposited, disposed
of or released on certain property located in Richmond, California
(the "Property") formerly owned by Catellus and leased to (i) KACC
for the purpose of shipbuilding activities conducted by KACC on
behalf of the United States during World War II, and (ii) subsequent
tenants thereafter. Plaintiffs allege, among other things, that (i)
the Defendants are jointly and severally liable for response costs
and natural resources damages under CERCLA, (ii) Defendant United
States of America is liable on grounds of negligence for damages
under the Federal Tort Claims Act, and (iii) Defendant Catellus is
strictly liable on grounds of negligence for such discharge,
deposit, disposal or release. Certain of the Plaintiffs have
alleged that they had incurred or expect to incur costs and
damages in the amount of approximately $49 million, in the
aggregate.

On or about September 23, 1992, the Plaintiffs filed a Third Amended
Complaint, alleging, among other things, that (i) the Defendants are
jointly and severally liable for response costs, declaratory relief,
and natural resources damages under CERCLA; (ii) Defendant United
States of America is liable on grounds of negligence, continuing
trespass and continuing nuisance for damages under the Federal Tort
Claims Act; (iii) Defendant Catellus is strictly liable on grounds
of continuing

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
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ITEM 3. LEGAL PROCEEDINGS (continued)

nuisance, continuing trespass, and negligence for such
discharge, deposit, disposal or release; (iv) Catellus is liable to
indemnify Plaintiffs; and (v) Catellus is liable for fraudulent
concealment of the alleged contamination.

On February 20, 1991, Catellus filed a third party complaint (the
"Third Party Complaint") against KACC and James L. Ferry & Son, Inc.
("Ferry") in the United States District Court for the Northern
District of California, Case No. C-89-2935 DLJ. The Third Party
Complaint was served on KACC as of April 12, 1991. The Third Party
Complaint alleges that, if the allegations of the Plaintiffs are
true, then KACC and Ferry (which is alleged to have performed
certain excavation activities on the Property and, as a result
thereof, to have released contaminants on the Property and to have
arranged for the transportation, treatment, and disposal of such
contaminants) are liable for Catellus' response costs and damages
under CERCLA and damages under other theories of negligence and
nuisance and, in the case of KACC, waste. Catellus seeks (i)
contribution from KACC and Ferry, jointly and severally, for its
costs and damages pursuant to CERCLA; (ii) indemnity from KACC and
Ferry for any liability or judgment imposed upon it; (iii)
indemnity from KACC and Ferry for reasonable attorneys fees and
costs incurred by it; (iv) damages for the injury to its interest
in the Property; and (v) treble damages from KACC pursuant to
California Code of Civil Procedure Section 732.

On June 4, 1991, Catellus served on KACC a first amended third party
complaint which alleges, in addition to the allegations of the Third
Party Complaint, that KACC and/or a predecessor in interest to KACC
is also liable for Catellus' damages, if any, on the basis of
alleged contractual indemnities contained in certain former leases
of the Property.

The Third Party Complaint was amended on or about October 26, 1992.
The amended Third Party Complaint alleges that, if the allegations
of the Plaintiffs are true, then KACC and Ferry are liable for (i)
Catellus' response costs and natural resources damage under CERCLA;
(ii) damages under theories of negligence, trespass and nuisance;
(iii) indemnity (equitable and contractual); and (iv) attorneys fees
under California Code of Civil Procedure Section 1021.6.

By letter dated October 26, 1992, counsel for certain underwriters
at Lloyd's London and certain London Market insurance companies
("London Insurers") advised that the London Insurers agreed to
reimburse KACC for defense expenses in the third party action
filed by Catellus, subject to a full reservation of rights.

The Plaintiffs filed a motion for leave to file a Third Amended
Complaint which would have added KACC as a first party defendant.
This motion was denied. On October 26, 1992, the Plaintiffs served
a separate Complaint against KACC for damages and declaratory
relief.

The claims asserted by the Plaintiffs are for (i) recovery
of costs, natural resources damages, and declaratory relief under
CERCLA; (ii) damages for injury to the Property arising from
negligence; (iii) damages under a theory of strict liability; (iv)
continuing nuisance and continuing trespass; (v) equitable
indemnity; (vi) response costs incurred by the Richmond
Redevelopment Agency under California Health & Safety Code Section
33459.4; and (vii) declaratory relief on the state claims. This
matter has been tendered to the London Insurers.

On June 24, 1994, the District Court approved a Consent Decree
consummating the settlement of the Plaintiffs' CERCLA and tort
claims against the United States in exchange for payment of
approximately $3.5 million plus 35% of future response costs. Trial
of this matter commenced in March 1995.

Picketville Road Landfill Matter

On July 1, 1991, the EPA served on KACC and 13 other PRPs a
Unilateral Administrative Order For Remedial Design and Remedial
Action (the "Order") at the Picketville Road Landfill site in
Jacksonville, Florida. The EPA seeks remedial design and remedial
action pursuant to CERCLA from some, but apparently not all, PRPs
based upon a Record of Decision outlining remedial cleanup measures
to be undertaken at the site adopted by the EPA on September 28,
1990. The site was operated as a municipal and industrial waste
landfill from 1968 to 1977 by the City of Jacksonville. KACC was
first notified by the EPA on January 17, 1991, that wastes from one
of KACC's plants may have been transported to and deposited in the
site. In its Record of Decision, the EPA estimated that the total
capital, operations, and maintenance costs

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ITEM 3. LEGAL PROCEEDINGS (continued)

of its elected remedy for the site would be approximately $9.9
million. In addition, the EPA has reserved the right to seek
recovery of its costs incurred relating to the Order, including,
but not limited to, reimbursement of the EPA's cost of response.
KACC has reached an agreement with certain PRPs who are conducting
remedial design and remedial action at the site, under which KACC
will fund $146,700 of the cost of the remedial design and remedial
action (unless remedial costs exceed $19 million in which event the
settlement agreement will be re-opened).

Asbestos-related Litigation

KACC is a defendant in a number of lawsuits in which the plaintiffs
allege that certain of their injuries were caused by exposure to
asbestos during, and as a result of, their employment or association
with KACC or exposure to products containing asbestos produced or
sold by KACC. The lawsuits generally relate to products KACC has
not manufactured for at least 15 years. At December 31, 1994, the
number of such lawsuits pending was approximately 25,200. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Financial Condition and Capital Spending
- Asbestos Contingencies." The portion of Note 9 of the Notes to
Consolidated Financial Statements contained in the Annual Report
under the heading "Asbestos Contingencies" is incorporated herein
by reference.

Other

On August 24, 1994, the United States Department of Justice (the
"DOJ") issued Civil Investigative Demand No. 11356 ("CID")
requesting information from the Company regarding (i) its
production, capacity to produce, and sales of primary aluminum
from January 1, 1991, to the date of the response; (ii) any actual
or contemplated reductions in its production of primary aluminum
during that period; and (iii) any communications with others
regarding any actual, contemplated, possible or desired reductions
in primary aluminum production by the Company or any of its
competitors during that period. The Company has submitted
documents and interrogatory answers to the DOJ responding to the
CID.

Various other lawsuits and claims are pending against KACC.
Management believes that resolution of the lawsuits and claims made
against KACC, including matters discussed above, will not have a
material adverse effect on the Company's consolidated financial
position or results of operations.

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 1994.

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 15, 1995 was 123. Page 56 of the
Annual Report, and the information in Note 8 of the Notes to
Consolidated Financial Statements under the heading "Dividends on
Common Stock" at page 48 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 1994 Credit Agreement (Exhibits 4.4 through 4.6 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 1994 Credit Agreement and the Indentures (Exhibits 4.1
through 4.3 to this Report) contain restrictions on the ability of
the Company's subsidiaries

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
-------------------------------------------------------------------

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

to transfer funds to the Company in the form of cash dividends,
loans or advances. Exhibits 4.1 through 4.6 to this Report; Note 5
of the Notes to Consolidated Financial Statements at pages 36-38
of the Annual Report; and the information under the heading
"Financial Condition and Capital - Spending Capital Structure" at
pages 23-24 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 3 of this Report; to the table at
page 20 of the Annual Report; to the discussion under the heading
"Results of Operations" at page 21 of the Annual Report; to Note 1
of the Notes to Consolidated Financial Statements at pages 32-34 of
the Annual Report; and to pages 54-55 of the Annual Report.

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

Pages 20-27 of the Annual Report are incorporated herein by
reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Pages 28-53 and page 56 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.

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 28-53
and 56 of the Annual Report.

2. Financial Statement Schedules
-----------------------------

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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
-------------------------------------------------------------------

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

3. Exhibits
--------

Reference is made to the Index of Exhibits immediately
preceding the exhibits hereto (beginning on page 19),
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.

Reference is made to the Index of Exhibits immediately
preceding the exhibits hereto (beginning on page 19),
which index is incorporated herein by reference.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
--------------------------------------------------------------------

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 24, 1995 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 24, 1995 George T. Haymaker, Jr.
-----------------------------
George T. Haymaker, Jr.
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)

Date: March 24, 1995 John T. La Duc
-----------------------------
John T. La Duc
Vice President and
Chief Financial Officer
(Principal Financial Officer)

Date: March 24, 1995 Charlie Alongi
-----------------------------
Charlie Alongi
Controller
(Principal Accounting Officer)

Date: March 24, 1995 Robert J. Cruikshank
-----------------------------
Robert J. Cruikshank
Director

Date: March 24, 1995 Charles E. Hurwitz
-----------------------------
Charles E. Hurwitz
Director

Date: March 24, 1995 Ezra G. Levin
-----------------------------
Ezra G. Levin
Director

Date: March 24, 1995 Robert Marcus
-----------------------------
Robert Marcus
Director

Date: March 24, 1995 Paul D. Rusen
-----------------------------
Paul D. Rusen
Director

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
--------------------------------------------------------------------$ 9.9

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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------

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 1996 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
4 of the Notes to Kaiser's Consolidated Financial Statements.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

KAISER ALUMINUM CORPORATION

Date: March 27, 1997 By George T. Haymaker, Jr.
------------------------------------------
George T. Haymaker, Jr.
Chairman of the Board,
President, 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 27, 1997 George T. Haymaker, Jr.
-----------------------------------------
George T. Haymaker, Jr.
Chairman of the Board,
President, and
Chief Executive Officer
(Principal Executive Officer)

Date: March 27, 1997 John T. La Duc
------------------------------------------
John T. La Duc
Vice President and Chief Financial Officer
(Principal Financial Officer)

Date: March 27, 1997 Arthur S. Donaldson
------------------------------------------
Arthur S. Donaldson
Controller
(Principal Accounting Officer)

Date: March 27, 1997 Robert J. Cruikshank
------------------------------------------
Robert J. Cruikshank
Director

Date: March 27, 1997 Charles E. Hurwitz
------------------------------------------
Charles E. Hurwitz
Director

Date: March 27, 1997 Ezra G. Levin
------------------------------------------
Ezra G. Levin
Director

Date: March 27, 1997 Robert Marcus
------------------------------------------
Robert Marcus
Director

Date: March 27, 1997 Robert J. Petris
------------------------------------------
Robert J. Petris
Director

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------

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 By-lawsCertificate of Retirement of KAC, amended as of February 26, 1991dated October 24, 1995 (incorporated
by reference to Exhibit 3.2 to Amendment
No. 2 to the Registration StatementReport on Form S-1, dated June
11, 1991,10-K for the period
ended December 31, 1995, filed by KAC, RegistrationFile No. 33-37895)1-9447).

*3.3 Amended and Restated By-laws of KAC, dated February 3, 1997.

4.1 Indenture, dated as of February 1, 1993, among KACC,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 12-3/12 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 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 9-7/97/8% Senior Notes Due 2002 (incorporated by
reference to Exhibit 4.3 to the Report on Form 10-K for the period
ended December 31, 1993, filed by KAC, File No. 1-9447).

4.5 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).

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

4.7 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 the Company's 10 7/8% Series C 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).

4.8 Credit Agreement, dated as of February 17,15, 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).

4.51-9447).

27
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------

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

4.9 First Amendment to Credit Agreement, dated as of July 21, 1994,
amending the Credit Agreement, dated as of February 17,15, 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).

*4.64.10 Second Amendment to Credit Agreement, dated as of March 10, 1995,
amending the Credit Agreement, dated as of February 17,15, 1994, as
amended, among KAC, KACC, the financial institutions party thereto,
and BankAmerica Business Credit, Inc., as Agent.

4.7 Certificate of Designations of Series A Mandatory Conversion
Premium Dividend Preferred Stock of KAC, dated June 28, 1993Agent (incorporated by
reference to Exhibit 4.34.6 to the Report on Form 10-K for the period
ended December 31, 1994, filed by KAC, File No. 1-9447).

4.11 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, 1993,1995, filed by KAC, File No. 1-9447).

4.8 Deposit4.12 Fourth Amendment to Credit Agreement, between KAC and The First National Bank of
Boston, dated as of June 30, 1993October 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 4.44.1 to the Report on Form 10-Q for the quarterly
period ended JuneSeptember 30, 1993,1995, filed by KAC, File No. 1-9447).

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
--------------------------------------------------------------------4.13 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 Number Description
------- -----------

4.94.11 to the Report on Form 10-K for the period
ended December 31, 1995, filed by KAC, File No. 1-9447).

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

4.15 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).

*4.16 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.

4.17 Intercompany Note between KAC and KACC (incorporated by reference to
Exhibit 4.2 to Amendment No. 510.11 to the Registration StatementReport on Form S-1, dated10-K for the period ended
December 13, 1989,31, 1996, filed by KACC, RegistrationMAXXAM Inc. ("MAXXAM"), File No. 33-30645)1-3924).

*4.10 Senior Subordinated4.18 Confirmation of Amendment of Non-Negotiable Intercompany Note, dated
as of October 6, 1993, between KAC and KACC and a
subsidiary of(incorporated by reference
to Exhibit 10.12 to the Report on Form 10-K for the period ended
December 31, 1996, filed by MAXXAM, dated December 15, 1992.

4.11File No. 1-3924).

4.19 Certificate of Designations of 8.255% PRIDES, Convertible Preferred
Stock of KAC, dated February 17, 1994 (incorporated by reference to
Exhibit 4.21 to the Report on Form 10-K for the period ended December
31, 1993, filed by KAC, File No. 1-9447).

4.124.20 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, and KACC
dated February 15, 1994 (incorporated by reference toFile No. 1-9447).

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------

Exhibit
4.22 to the Report on Form 10-K for the period ended
December 31, 1993, filed by KAC, File No. 1-9447).

4.13Number Description
- ------ -----------

4.21 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).

4.14 Senior Subordinated Intercompany Note between KAC and KACC
dated June 30, 1993 (incorporated by reference to Exhibit
4.24 to the Report on
Form 10-K for the period ended December 31, 1993, filed by KAC, File
No. 1-9447).

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

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

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

10.3 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).

10.5 Assumption Agreement, dated as of October 28, 1988
(incorporated by reference to Exhibit HHH to the Final
Amendment to the Schedule 13D of MAXXAM Group Inc. and
others in respect of the Common Stock of KAC, par value
$.33-1/3 per share).

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
--------------------------------------------------------------------

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

10.6 Agreement, dated as of June 30, 1993, between KAC and MAXXAM
(incorporated by reference to Exhibit 10.2 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
----------------------------------------------

10.7[Exhibits 10.6 - 10.16, inclusive]

10.6 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).

10.810.7 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).

10.8 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).

10.9 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).

10.10 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).

10.10 Promissory Note, dated October 4, 1990,10.11 First Amendment to Employment Agreement by Robert W. Irelan
and Barbara M. Irelan tobetween KACC, KAC and
George T. Haymaker, Jr. (incorporated by reference to Exhibit 10.5410 to
the Report on Form 10-K10-Q for the quarterly period ended December 31,
1990,June 30, 1996,
filed by MAXXAM,KAC, File No. 1-3924).

10.111-9447).

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------

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

10.12 Promissory Note, dated February 1, 1989, by Anthony R. Pierno and
Beverly J. Pierno to MAXXAM (incorporated by reference to Exhibit
10.30 to Form 10-K for the period ended December 31, 1988, filed by
MAXXAM, File No. 1-3924).

10.1210.13 Promissory Note, dated July 19, 1990, by Anthony R. Pierno to MAXXAM
(incorporated by reference to Exhibit 10.31 to Form 10-K for the
period ended December 31, 1990, filed by MAXXAM, File No. 1-3924).

10.1310.14 Promissory Note, dated July 20, 1993, between MAXXAM and Byron L. Wade
(incorporated by reference to Exhibit 10.59 to Form 10-K for the
period ended December 31, 1993, filed by MAXXAM, File No. 1-3924).

10.14 Employment Agreement, dated August 20, 1993, between KACC
and Robert E. Cole (incorporated by reference to Exhibit
10.63 to Form 10-K for the period ended December 31, 1993,
filed by MAXXAM, File No. 1-3924).

10.15 Compensation Agreement, dated July 18, 1994, between KACC
and Larry L. Watts (incorporated by reference to Exhibit
10.1 to the Report on Form 10-Q for the quarterly period
ended June 30, 1994, filed by KAC, File No. 1-9447).

10.16 Compensation Agreement, dated July 18, 1994, between KACC
and Geoff S. Smith (incorporated by reference to Exhibit
10.2 to the Report on Form 10-Q for the quarterly period
ended June 30, 1994, filed by KAC, File No. 1-9447).

*10.17 Letter Agreement, dated January 1995, between KAC and Charles E.
Hurwitz, granting Mr. Hurwitz stock options under the Kaiser 1993
Omnibus Stock Incentive Plan.

*10.18Plan (incorporated by reference to Exhibit
10.17 to the Report on Form 10-K for the period ended December 31,
1994, filed by KAC, File No. 1-9447).

10.16 Form of letter agreement with persons granted stock options under the
Kaiser 1993 Omnibus Stock Incentive Plan to acquire shares of KAC
common stock.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
--------------------------------------------------------------------stock (incorporated by reference to Exhibit Number Description
------- -----------10.18 to the Report
on Form 10-K for the period ended December 31, 1994, filed by KAC,
File No. 1-9447).

*11 Computation of Earnings Per Common and Common Equivalent Share

*13 The portions of KAC's Annual Report to shareholders for the year ended
December 31, 1994,1996, which are incorporated by reference into this
Report.

*21 Significant Subsidiaries of KAC.

*27 Financial Data Schedule.

-----------

* Filed herewith

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
-------------------------------------------------------------------*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

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------

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 . . . . . . . .Limited............................. United Kingdom
Kaiser Alumina Australia Corporation . . .Corporation................... Delaware
Kaiser Aluminium International, Inc. . . .Inc.................... Delaware
Kaiser Aluminum & Chemical Corporation . .Corporation................. Delaware
Kaiser Aluminum & Chemical of Canada LimitedLimited........... Ontario
Kaiser Bauxite Company . . . . . . . . . .Company................................. Nevada
Kaiser Finance Corporation . . . . . . . ............................. Delaware
Kaiser Jamaica Bauxite Company (partnership)........... Jamaica
Kaiser Jamaica Corporation . . . . . . . .Corporation............................. Delaware
Queensland Alumina Limited . . . . . . . .Limited............................. Queensland
Volta Aluminium Company Limited . . . . . .Limited........................ Ghana

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
----------------------------------------------------

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------

Domestic California Pennsylvania
Operations Los Angeles (City of Commerce) Erie
(Partial List) ExtrudedEngineered Products Forgings Plant and OfficesEngineered Products
Los Angeles (Santa Fe Springs) South Carolina
ExtrudedEngineered Products Fabricating Greenwood
Oxnard Forgings
ForgingsEngineered Products
Engineered Products Greenwood
Pleasanton Engineered Products Machine Shop
R&D at the Center for Technology;Technology, Tennessee
Administrative Offices Jackson
Florida ExtrudedEngineered Products
Mulberry Texas
Sodium Silicofluoride, Potassium Silicofluoride DallasHouston
Louisiana Extruded Products Offices
Baton Rouge Houston
Alumina, Kaiser Alumina Technical Services, Kaiser Aluminum Corporation Headquarters
International Business Development, andBaton Rouge Sherman
Alumina, Environmental Offices ExtrudedEngineered Products
Gramercy Washington
Alumina Mead
Michigan Primary Aluminum;Aluminum,
Detroit (Southfield) Division Technology Center
Automotive Product Development and Sales Richland
Ohio ExtrudedEngineered Products
Canton Tacoma
CastingsEngineered Products Primary Aluminum
Newark Trentwood
ExtrudedEngineered Products Flat-Rolled Products
Plant and Offices
Oklahoma
Tulsa
Aluminum and Magnesium Extruded Products; Anodes

---------------------------------------------------------------------------------------------------------------Engineered Products
- -------------------------------------------------------------------------------------------
Worldwide Australia Japan
Operations Queensland Alumina Limited (28.3% owned) Furukawa Kaiser Forged Products Company
(Partial List) Alumina (47.5%)
Canada Sales Office
Kaiser Aluminum & Chemical of Canada Limited The NetherlandsRussia
(100%) Kaiser Aluminum Mill Products Inc. (100%)
Extruded Products Sales Office
Ghana Russia
Volta Aluminium Company Limited (90%) Kaiser Aluminium Russia, Inc. (100%)
Primary AluminumEngineered Products International Business Development
JamaicaGhana Wales, United Kingdom
----- ---------------------
Volta Aluminium Company Limited (90%) Anglesey Aluminium Limited (49%)
Primary Aluminum Primary Aluminum
Jamaica
Alumina Partners of Jamaica (65%)
Anglesey Aluminium Limited (49%)
Bauxite;Bauxite, Alumina Primary Aluminum
Kaiser Jamaica Bauxite Company (49%)
Bauxite