<PAGE>   1
                                                                   Exhibit 10.12



                       AMENDMENT NO. 3 TO CREDIT AGREEMENT


      This AMENDMENT NO. 3 TO CREDIT AGREEMENT (this "Amendment") is entered
into as of August 24, 2001 among GENEVA STEEL LLC, a Delaware limited liability
company ("Borrower"), each Lender signatory hereto (each, together with its
successors and permitted assigns, a "Lender"), and CITICORP USA, INC., acting as
agent for itself and the other Lenders (in such capacity, "Agent"). Unless
otherwise specified herein, all capitalized terms used in this Amendment shall
have the meanings ascribed to them in the Credit Agreement (as hereinafter
defined).

                              W I T N E S S E T H:
                               - - - - - - - - - -

      WHEREAS, the Borrower, the Agent, the Issuer and the Lenders are party to
a Credit Agreement dated as of January 3, 2001 (as amended, supplemented,
restated or otherwise modified from time to time, the "Credit Agreement");

      WHEREAS, the Borrower desires to enter into a Product Sales Agreement
with Feorrostaal Incorporated;

      WHEREAS, the parties to the Credit Agreement desire to amend the Credit
Agreement as herein set forth to permit the Borrower to enter into such Product
Sales Agreement with Ferrostaal Incorporated;

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



                                   ARTICLE I

                       AMENDMENTS TO THE CREDIT AGREEMENT


            SECTION 1.01. AMENDMENTS TO THE CREDIT AGREEMENT. Subject to the
satisfaction of the conditions precedent set forth in Article II hereof, the
Credit Agreement is hereby amended as follows:

            (a) New Definitions. The following definitions are hereby inserted
in Section 1.1 of the Credit Agreement in their appropriate alphabetical order:

                  "Availability Figure" means the amount set forth below for the
            applicable time period:

<TABLE>
<CAPTION>
            AMOUNT               TIME PERIOD
            ------               -----------
<S>                              <C>
            $32,500,000          August 19, 2001 through and including September 15, 2001
</TABLE>
<PAGE>   2
<TABLE>
<S>                              <C>
            $35,000,000          September 16, 2001 and thereafter
</TABLE>


                  "Net Outstandings" means the sum of the Revolving Credit
            Outstandings minus Letter of Credit Obligations that are cash
            collateralized in full

                  "Ferrostaal Agreement" means that certain Product Sales
            Agreement, dated as of August 2, 2001, between the Borrower and
            Ferrostaal, as amended from time to time on terms acceptable to the
            Agent.

                  "Ferrostaal" means Ferrostaal Incorporated, a Delaware
            corporation, and any successor thereto or assignee thereof
            acceptable to the Agent.

                  "O/S Amount" means the amount set forth below for the
            applicable time period:


<TABLE>
<CAPTION>
            AMOUNT                  FOR THE WEEK ENDING
            ------                  -------------------
<S>                                <C>
            $26,900,000             August 25, 2001
            $24,300,000             September 1, 2001
            $19,800,000             September 8, 2001
            $13,600,000             September 15, 2001
            zero ($0)               thereafter
</TABLE>


            (b) Amendment to Section 1.1. The definition of "Covenant Liquidity
Event Period" is hereby amended and restated in its entirety as follows:

            "Covenant Liquidity Event Period" means, for any period when Net
            Outstandings are greater than zero and the Available Credit is less
            than $35,000,000, the period (a) during which Net Outstandings are
            greater than the O/S Amount for such period or (b)(i) beginning on
            the first date on which the Available Credit is less than the
            applicable Availability Figure for one Business Day, and (ii) ending
            on the first date on which the Available Credit is greater than the
            applicable Availability Figure for one Business Day.

            (c) Amendment to Section 5.1. Section 5.1 of the Credit Agreement is
hereby amended and restated in its entirety as follows:


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<PAGE>   3
                  SECTION 5.1 MAINTENANCE OF CONSOLIDATED
            CASH FLOW. So long as Net Outstandings are
            greater than the O/S Amount, the Borrower will
            maintain for each period commencing on the
            Effective Date and ending on the last day of
            each Fiscal Quarter cumulative Consolidated Cash
            Flow of not less than $(80,000,000).

            (d) Amendment to Section 5.5. Section 5.5 of the Credit Agreement is
hereby amended and restated in its entirety as follows:

                  SECTION 5.5 MAINTENANCE OF TANGIBLE NET
            WORTH. So long as Net Outstandings are greater
            than the O/S Amount, the Borrower will maintain
            a Tangible Net Worth greater than or equal to
            (a) the Borrower's Tangible Net Worth as of the
            Effective Date less (b) $60,000,000.

            (e) Amendment to Section 8.4. Section 8.4 of the Credit Agreement is
hereby amended by (a) deleting the word "and" at the end of clause (f) thereof,
(b) deleting the "." at the end of clause (g) and replacing it with "; and" and
(c) adding a new clause (h) to read as follows: "(h) any sale of inventory
pursuant to the Ferrostaal Agreement."

            (f) Amendment to Schedule I . The Revolving Credit Commitments set
forth on Schedule I of the Credit Agreement are hereby amended and restated in
their entirety as follows:

<TABLE>
<CAPTION>
       LENDER                                          AMOUNT OF
                                                       COMMITMENT
<S>                                                   <C>
       Citicorp USA, Inc.                             $21,000,000

       Heller Financial, Inc.                         $15,000,000

       Foothill Capital Corporation                   $18,000,000

       IBJ Whitehall Business Credit  Corporation     $ 6,000,000

       GMAC Business Credit, LLC                      $15,000,000
                                                      -----------

       TOTAL                                          $75,000,000
</TABLE>


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<PAGE>   4
                                   ARTICLE II

                        CONDITIONS PRECEDENT TO AMENDMENT

      The amendments to the Credit Agreement set forth in Article I hereof shall
become effective on the date (the "Effective Date") that each of the following
conditions precedent are or shall be contemporaneously satisfied:

            SECTION 2.01. The Agent shall have received counterparts of this
Amendment duly executed by the Agent, the Requisite Lenders and the Borrower.

            SECTION 2.02. The Agent shall have received, dated the date of
receipt thereof by the Agent, in form and substance satisfactory to the Agent, a
certificate signed by a duly authorized officer of the Borrower stating that:

            (a) The representations and warranties contained in Article III
hereof are correct on and as of the date of such certificate as though made on
and as of such date, and

            (b) After giving effect to this Amendment, no event has occurred and
is continuing which constitutes a Default or an Event of Default.

            SECTION 2.03. The Agent shall have received from the Borrower a
certified copy of the Ferrostaal Agreement.

            SECTION 2.04. The Agent shall have received Amendment No. 2 to Term
Loan Agreement in the form attached as Exhibit A hereto executed by the Borrower
and the Requisite Lenders ("Amendment No. 2 to Term Loan Agreement"), and the
conditions to effectiveness thereunder shall have been satisfied or waived.

            SECTION 2.05. The Agent shall have received such other documents
from the Borrower as the Agent shall request in writing.



                                  ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF BORROWER

      The Borrower represents and warrants to the Agent and the Lenders that:

            SECTION 3.01. AUTHORIZATION. The execution, delivery and performance
by the Borrower of this Amendment have been authorized by all necessary limited
liability company action and the Credit Agreement as amended by this Amendment,
is a legal, valid and binding obligation of the Borrower enforceable against it
in accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and the application
of general principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law).

            SECTION 3.02. NO CONFLICT. Neither the execution, delivery and
performance of this Amendment nor the consummation of the transactions
contemplated hereby does or shall


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contravene, result in a breach of, or violate (a) any provision of the
Borrower's certificate of formation or agreement of limited liability company,
(b) any law or regulation, or any order or decree of any court or government
agency or instrumentality, or (c) any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which the Borrower or any of its Subsidiaries
is a party or by which the Borrower or any of its Subsidiaries or any of their
property is bound.

            SECTION 3.03. REPRESENTATIONS AND WARRANTIES IN THE CREDIT
AGREEMENT. The representations and warranties set forth in Article IV of the
Credit Agreement and in each other Loan Document are true and correct in all
material respects on and as of the Effective Date with the same effect as though
made on and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date.

            SECTION 3.04. NO DEFAULT. After giving effect to this Amendment, no
Default or Event of Default has occurred and is continuing under the Credit
Agreement.



                                   ARTICLE IV

                            MISCELLANEOUS PROVISIONS

            SECTION 4.01. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT NO
WAIVER; CONSENT UNDER SECTION 8.12

            (a) Except as specifically amended above, the Credit Agreement and
the other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed;

            (b) The Requisite Lenders hereby consent, pursuant to Section 8.12
of the Credit Agreement, to the amendment to the Term Loan Agreement pursuant to
Amendment No. 2 to Term Loan Agreement in the form attached hereto.

            (c) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any Default or Event of Default or any right,
power, privilege or remedy of the Agent or any Lender under the Credit Agreement
or any Loan Document, or constitute a waiver of any provision of the Credit
Agreement or any Loan Document. Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of similar import shall mean and be a reference to the Credit
Agreement as amended hereby.

            SECTION 4.02. COSTS AND EXPENSES. As provided in Section 11.3 of the
Credit Agreement, the Borrower agrees to reimburse the Agent and the Lenders for
all reasonable fees, costs and expenses, including the reasonable fees, costs
and expenses of counsel or other advisors for advice, assistance, or other
representation in connection with this Amendment.

            SECTION 4.03. RELEASE. In further consideration of the Lenders'
execution of this Amendment, the Borrower hereby releases each of the Agent,
each Lender and the Issuer and their respective affiliates, officers, employees,
directors, agents and attorneys (collectively, the "Releasees") from any and all
claims, demands, liabilities, responsibilities, disputes, causes of action
(whether at law or equity) and obligations of every kind or nature whatsoever,
whether liquidated or unliquidated, known or unknown, matured or unmatured,
fixed or contingent that


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the Borrower may have against the Releasees which arise from or in any way
relate to the Obligations, any Collateral, any Loan Document, any documents,
agreements, dealings or other matters in connection with or relating to any of
the Loan Documents, and any third parties liable in whole or in part for the
Obligations, in each case to the extent arising (x) on or prior to the date
hereof or (y) out of, or relating to, actions, dealings or matters occurring on
or prior to the date hereof (including, without limitation, any actions or
inactions which Releasees may have taken or omitted to take prior to the date
hereof).

            SECTION 4.04. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

            SECTION 4.05. HEADINGS. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purposes.

            SECTION 4.06. COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by facsimile, each of which counterparts when so
executed shall be deemed an original, but all such counterparts shall constitute
one and the same instrument.

                            [SIGNATURE PAGES FOLLOW]


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      IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their proper and duly authorized officers as of the
date set forth above.

BORROWER:

GENEVA STEEL LLC


By:     /s/ Steve Bunker
        ----------------------------------------
Name:   Steve Bunker
        ----------------------------------------
Title:  Vice President of Finance and Treasurer
        ----------------------------------------


AGENT AND LENDER:

CITICORP USA, INC.,
as Agent and a Lender


By:     /s/ David Jaffe
        ----------------------------------------
Name:   David Jaffe
        ----------------------------------------
Title:  Vice President
        ----------------------------------------


LENDERS:

FOOTHILL CAPITAL CORPORATION
as a Lender


By:     /s/ Michael P. Baronowski
        ----------------------------------------
Name:   Michael P. Baronowsky
        ----------------------------------------
Title:  Vice President
        ----------------------------------------


IBJ WHITEHALL BUSINESS CREDIT CORPORATION
as a Lender


By:     /s/ Carl Giordano
        ----------------------------------------
Name:   Carl Giordano
        ----------------------------------------
Title:  Assistant Vice President
        ----------------------------------------


HELLER FINANCIAL, INC., as a Lender


By:     /s/ Alfred J. Scoyni
        ----------------------------------------
Name:   Alfred J. Scoyoni
        ----------------------------------------
Title:  Vice President
        ----------------------------------------


GMAC BUSINESS CREDIT, LLC, as a Lender


By:     /s/ Thomas Maiale
        ----------------------------------------
Name:   Thomas Maiale
        ----------------------------------------
Title:  Vice President
        ----------------------------------------




                       [Signature Page to Amendment No. 3]