<PAGE>   1
                                                                   EXHIBIT 10.20

                      SECOND AMENDMENT TO CREDIT AGREEMENT


         THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of January 25, 1999, is entered into by and among SIMCALA, INC. (the
"Borrower"), the guarantors identified as such on the signature pages attached
hereto (the "Guarantors;" collectively, the Borrower and the Guarantors are
referred to as the "Credit Parties"), the lenders identified as such on the
signature pages hereto (the "Lenders") and NATIONSBANK, N.A., as Agent (the
"Agent") for the Lenders.

                                    RECITALS

         A. The Borrower, the Guarantors, the Lenders and the Agent entered into
that certain Credit Agreement dated as of March 31, 1998, as amended by that
Amendment Letter dated November 9, 1998 (as so amended, the "Existing Credit
Agreement").

         B. The Lenders have agreed to execute and deliver this Amendment on the
terms and conditions set forth herein.

         NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                                     PART I
                                   DEFINITIONS

         SUBPART 1.1 GENERAL DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including the preamble
and recitals, have the meanings provided in the Existing Credit Agreement.

         SUBPART 1.2 CERTAIN DEFINITIONS. Unless the context otherwise requires,
the following terms used in this Amendment shall have the indicated definitions:

         "Amended Credit Agreement" means the Existing Credit Agreement as
amended hereby.

         "Amendment No. 2 Effective Date" has the meaning ascribed to such term
in Part 4.1 of this Amendment.





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<PAGE>   2

                                     PART II
                     AMENDMENTS TO EXISTING CREDIT AGREEMENT

                     SUBPART 2.1 AMENDMENTS TO SECTION 1.1.

                  (a) The following definitions appearing in Section 1.1 of the
         Existing Credit Agreement are hereby amended and restated to read as
         follows:

                  "Applicable Percentage" means, for purposes of calculating the
         applicable interest rate for any day for any Loan, the applicable rate
         of the Unused Fee for any day for purposes of Section 3.5(b), the
         applicable rate of the Standby Letter of Credit Fee for any day for
         purposes of Section 3.5(c)(i) or the applicable rate of the Trade
         Letter of Credit Fee for any day for purposes of Section 3.5(c)(ii),
         the appropriate applicable percentage corresponding to the Total
         Leverage Ratio in effect as of the most recent Calculation Date:

<TABLE>
<CAPTION>
 ========================================================================================================================
                                 APPLICABLE        APPLICABLE        APPLICABLE        APPLICABLE
                  TOTAL        PERCENTAGE FOR    PERCENTAGE FOR    PERCENTAGE FOR    PERCENTAGE FOR       APPLICABLE
  PRICING       LEVERAGE         EURODOLLAR         BASE RATE      STANDBY LETTER   TRADE LETTER OF     PERCENTAGE FOR
   LEVEL         RATIO             LOANS             LOANS         OF CREDIT FEE       CREDIT FEE      COMMITMENT FEES
 ------------------------------------------------------------------------------------------------------------------------
 <S>         <C>               <C>               <C>               <C>              <C>                <C>

     I        > 5.00 to 1.0         3.00%             2.00%            3.00%             1.00%               .60%
 ------------------------------------------------------------------------------------------------------------------------

     II       < 5.00 to 1.0         2.25%             1.25%            2.25%              .50%               .50%
              -
              but > 3.75 to
                   1.0
 ------------------------------------------------------------------------------------------------------------------------
              < 3.75 to 1.0
    III       -                      2.00%             1.00%            2.00%              .50%               .50%
              but > 2.50 to
                   1.0
 ------------------------------------------------------------------------------------------------------------------------

     IV       < 2.50 to 1.0         1.75%              .75%            1.75%              .50%              .375%
              -
 ========================================================================================================================
</TABLE>

                  The Applicable Percentages shall be determined and adjusted
         quarterly on the date (each a "Calculation Date") five Business Days
         after the earlier of (x) the date by which the Borrower is required to
         provide the officer's certificate in accordance with the provisions of
         Section 7.1(c) for the most recently ended fiscal quarter of the Credit
         Parties or (y) the date such officer's certificate is actually
         delivered to the Agent; provided, however, that (i) the initial
         Applicable Percentages shall be based on Pricing Level I (as shown
         above) and shall remain at Pricing Level I until the first Calculation
         Date subsequent to December 30, 1998, and, thereafter, the Pricing
         Level shall be determined by the Total Leverage Ratio as of the last
         day of the most recently ended fiscal quarter of the Credit Parties
         preceding the applicable Calculation Date, and (ii) if the Borrower
         fails to provide the officer's certificate to the Agency Services
         Address as required by Section 7.1(c) for the last day of the most
         recently ended fiscal quarter of the Credit Parties preceding the
         applicable Calculation Date, the Applicable Percentage from such
         Calculation Date shall be based on Pricing Level I until such time as
         an appropriate officer's certificate is provided, whereupon the Pricing
         Level shall be determined by the Total Leverage Ratio as of the last
         day of the most recently ended fiscal quarter of the Credit Parties
         preceding such Calculation Date. Except as provided above, each
         Applicable Percentage shall be effective from one Calculation Date
         until the next Calculation Date. Any adjustment in the Applicable
         Percentages shall be applicable to all existing Loans and Letters of
         Credit as well as any new Loans and Letters of Credit made or issued.
         The Applicable Percentage for the Standby Letter of Credit Fee 


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<PAGE>   3

         for any standby Letter of Credit shall be 1.0% so long as such Letter
         of Credit is cash-collateralized pursuant to Section 2.2(l).

                  "Collateral Documents" means a collective reference to the
         Security Agreement, the Pledge Agreement, the Mortgage Instruments, the
         Assignment of Cash Collateral Account and such other documents executed
         and delivered in connection with the attachment and perfection of the
         Agent's security interests and liens arising thereunder, including,
         without limitation, UCC financing statements and patent and trademark
         filings.

         (b) A new definition of "Assignment of Cash Collateral Account is
hereby added to Section 1.1 of the Existing Credit Agreement in the appropriate
alphabetical order to read as follows:

                  "Assignment of Cash Collateral Account" means that Assignment
         of Cash Collateral Account dated as of January 15, 1999 among the
         Borrower and the Agent.

         (c) The definition of "Consolidated Net Worth" appearing in Section 1.1
of the Existing Credit Agreement is hereby deleted.

         SUBPART 2.2 AMENDMENT TO SECTION 2.2. A new clause (l) is added to
Section 2.2 of the Existing Credit Agreement immediately following clause (k),
which shall read as follows:

         (l) Cash Collateral. Until such time as the Interest Coverage Ratio is
at least 1.50 to 1.0 for two consecutive fiscal quarters subsequent to December
31, 1999, the Borrower shall pay to the Agent cash, to be held by the Agent, for
the benefit of the Lenders, in a cash collateral account pursuant to the
Assignment of Cash Collateral Account as additional security for the LOC
Obligations in respect of drawings under all outstanding Letters of Credit in an
amount equal to the maximum aggregate amount which may be drawn under such
Letters of Credit. The Applicable Percentage otherwise in effect for the Standby
Letter of Credit Fee with respect to any standby Letter of Credit which is
cash-collateralized pursuant to this clause (l) shall be 1.0% for so long as
such Letter of Credit is cash-collateralized.

         SUBPART 2.3 AMENDMENTS TO SECTION 7.1. Section 7.1(m) of the Existing
Credit Agreement is hereby renumbered as Section 7.1(n) and a new Section 7.1(m)
is added to the Existing Credit Agreement which reads as follows:

                  (m) Monthly Financial Statements. As soon as available, and in
         any event within 30 days after the end of each fiscal month of the
         Credit Parties, a consolidated balance sheet and income statement of
         the Credit Parties as of the end of such fiscal month, together with
         related consolidated statements of operations and retained earnings and
         of cash flows for such fiscal month, in each case setting forth in
         comparative form (i) consolidated figures for the corresponding period
         of the preceding fiscal year and (ii) consolidated figures for the
         corresponding period of the budget of the Credit Parties for the
         current fiscal year, all such financial information described above to
         be in a form satisfactory to the Agent.

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<PAGE>   4

         SUBPART 2.4 AMENDMENTS TO SECTION 7.11. Section 7.11 of the Existing
Credit Agreement is hereby amended and restated to read as follows:

         7.11     FINANCIAL COVENANTS.

         (a) Interest Coverage Ratio. The Interest Coverage Ratio, as of the
last day of each fiscal quarter of the Credit Parties, shall be greater than or
equal to:


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
   Fiscal Year         March 31          June 30         September 30        December 31
--------------------------------------------------------------------------------------------
   <S>                 <C>               <C>             <C>                 <C>
       1998                                1.50              1.50               1.50
--------------------------------------------------------------------------------------------
       1999              1.15              1.05              1.05               1.05
--------------------------------------------------------------------------------------------
       2000              1.00              1.00              1.00               1.00
--------------------------------------------------------------------------------------------
       2001              1.25              1.25              1.50               1.75
--------------------------------------------------------------------------------------------
       2002              1.75              1.75              1.75               2.00
--------------------------------------------------------------------------------------------
    thereafter           2.00
--------------------------------------------------------------------------------------------
</TABLE>


         (b) Net Leverage Ratio. The Credit Parties shall cause the Net Leverage
Ratio, as of the last day of each fiscal quarter of the Credit Parties, to be
less than or equal to:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
   Fiscal Year         March 31          June 30         September 30        December 31
--------------------------------------------------------------------------------------------
<S>                    <C>               <C>             <C>                 <C>
       1998                                5.50              5.50               7.00
--------------------------------------------------------------------------------------------
       1999              7.25              8.25              8.50               9.25
--------------------------------------------------------------------------------------------
       2000              9.75             10.00             11.25              11.50
--------------------------------------------------------------------------------------------
       2001              8.75              7.50              6.50               5.50
--------------------------------------------------------------------------------------------
       2002              5.50              5.50              5.50               5.00
--------------------------------------------------------------------------------------------
    thereafter           5.00
--------------------------------------------------------------------------------------------
</TABLE>


         (c) Minimum Consolidated EBITDA. At all times the Consolidated EBITDA,
as of the last day of each fiscal quarter of the Credit Parties, shall be
greater than or equal to:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
   Fiscal Year         March 31          June 30         September 30        December 31
--------------------------------------------------------------------------------------------
<S>                   <C>              <C>               <C>                 <C>    
       1998                                                                  $ 9,500,000
--------------------------------------------------------------------------------------------
       1999           $ 9,000,000      $ 8,100,000        $ 8,100,000        $ 7,800,000
--------------------------------------------------------------------------------------------
       2000           $ 7,800,000      $ 7,800,000        $ 7,800,000        $ 7,800,000
--------------------------------------------------------------------------------------------
       2001           $10,200,000      $12,100,000        $13,700,000        $16,100,000
--------------------------------------------------------------------------------------------
       2002           $16,100,000      $16,100,000        $16,100,000        $17,200,000
--------------------------------------------------------------------------------------------
    thereafter        $17,200,000
--------------------------------------------------------------------------------------------
</TABLE>



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<PAGE>   5
                                    PART III
                REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES

         Each Credit Party hereby represents and warrants to the Agent and to
each Lender that:

                           (i) each of the representations and warranties of the
                  Borrower contained in the Amended Credit Agreement or in any
                  other Credit Document is true as of the date hereof (after
                  giving effect to this Amendment);

                           (ii) after giving effect to this Amendment, no
                  Default or Event of Default exists and is continuing under the
                  Amended Credit Agreement;

                           (iii) since the date of the last financial statements
                  of the Borrower delivered to Lenders, no material adverse
                  change has occurred in the business, financial condition,
                  operations or prospects of the Consolidated Parties other than
                  as previously disclosed to the Lenders; and

                           (iv) no consent, approval, authorization or order of
                  , or filing, registration or qualification with, any court or
                  governmental authority or third party is required in
                  connection with the execution, delivery or performance by such
                  Person of this Amendment.

                                     PART IV
                           CONDITIONS TO EFFECTIVENESS

         SUBPART 4.1. EFFECTIVE TIME OF AMENDMENT. This Amendment shall be and
become effective as of the first Business Day upon which each of the conditions
set forth in this Subpart 4.1 shall have been completed to the satisfaction of
the Agent and the Required Lenders (the "Amendment No. 2 Effective Date").

         SUBPART 4.1. EXECUTION OF AMENDMENT. The Agent shall have received
counterparts (or other evidence of execution, including telephonic message,
satisfactory to the Agent) of the due execution of this Amendment on behalf of
the Credit Parties and the Required Lenders.

         SUBPART 4.2. AMENDMENT FEES. The Agent shall have received from the
Borrower, on the Amendment No. 2 Effective Date, for the account of each Lender,
in immediately available funds, an amendment fee of 0.25% of each Lender's
Commitment.

         SUBPART 4.4. ASSIGNMENT OF CASH COLLATERAL ACCOUNT. The Agent shall
have received executed counterparts of the Assignment of Cash Collateral Account
in form of Exhibit A hereto.

         SUBPART 4.4. OTHER DOCUMENTS. The Agent shall have received such other
documents relating to the transactions contemplated hereby as the Agent or
counsel to the Agent may reasonably request of the Borrower in writing on or
before the Amendment No. 2 Effective Date.

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<PAGE>   6

         SUBPART 4.5. EXPENSES OF AGENT. The Borrower shall have reimbursed the
Agent for all reasonable out-of-pocket expenses of the Agent , including without
limitation, all reasonable fees and expenses of its attorneys, incurred in
connection with the negotiation, preparation or execution of this Amendment.


                                     PART V
                                  MISCELLANEOUS

         SUBPART 5.1 FURTHER ASSURANCES. As soon as practicable after receipt of
a written request from the Agent, and in any event not later than 30 days from
the date such request is received by the Borrower, the Credit Parties shall
cause to be delivered to the Agent, in form and content reasonably satisfactory
to the Agent, all documents or other instruments incident to the transactions
contemplated by this Agreement in the reasonable judgment of the Agent.

         SUBPART 5.2. REFERENCES. References in this Amendment to any Part or
Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment. As of the Amendment No. 2 Effective Date, all references in the
Credit Documents to the "Credit Agreement" shall be deemed to refer to such
document as amended by this Amendment.

         SUBPART 5.3. COUNTERPARTS. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which constitute together one and the same agreement.

         SUBPART 5.4. GOVERNING LAW. This Amendment shall be deemed to be a
contract made under and governed by the internal laws and judicial decisions of
the State of North Carolina without giving effect to the conflict of law
principles thereof.

         SUBPART 5.5. SUCCESSORS AND ASSIGNS. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

         SUBPART 5.6. ENTIRE AGREEMENT. The Amended Credit Agreement, this
Amendment, and the other Credit Documents, as amended hereby, constitute the
entire contract among the parties relative to the subject matter hereof.

         SUBPART 5.7. NO OTHER CHANGES. Except as expressly modified and amended
in this Agreement, all of the terms, provisions and conditions of the Credit
Documents shall remain unchanged.




                                     - 6 -
<PAGE>   7




         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.

BORROWER:                           SIMCALA, INC.,
                                    a Delaware corporation

                                    By:      /s/ C. E. Boardwine  
                                       --------------------------------------
                                    Name:    C. E. Boardwine
                                    Title:   Pres/CEO


GUARANTOR:                          SIMCALA HOLDINGS, INC.,
                                    a Georgia corporation

                                    By:      /s/ William A. Davies
                                       --------------------------------------
                                    Name:    William A. Davies
                                    Title:   Director


LENDERS:                            NATIONSBANK, N.A., individually as a Lender
                                     and in its capacity as Agent

                                    By:      /s/ Curtis D. Lueker
                                       --------------------------------------
                                    Name:    Curtis D. Lueker
                                    Title:   Assistant Vice President


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