Lithium might currently be in the doldrums due to bloated inventory levels but that has not stopped Galaxy Resources (ASX:GXY) from executing its growth strategy to meet the forecast surge in demand.

The lithium producer has advanced its Sal de Vida lithium brine project in Argentina into the design phase, with front-end engineering design (FEED) for the wellfield and ponds now underway.

It has also placed the FEED package for the process plant and non-process infrastructure out for tender.

Process test work is producing lithium carbonate with grades at the upper end of expectations, while a long-term pump test has finished on schedule with aquifer results meeting or exceeding plans.

Additionally, evaporation at the pilot ponds is performing in line with production models and first operations at the pilot plant is scheduled for the third quarter.

Permitting is also progressing with the granting of operational permits for the extraction of fresh water and use of reagents.

Galaxy added that while the COVID-19 pandemic had impacted the development schedule, it still expected stage-one production to begin in 2022.


Lithium outlook is improving

While lithium market conditions remain challenging due to inventory overhang, Galaxy noted that recently announced stimulus packages are expected to accelerate the pace at which electric vehicles (EV) are adopted globally.

The European Union has introduced a €20bn ($32.4bn), two-year purchasing facility for EVs and individual countries are also following suit.

Germany has effectively doubled EV subsidies, is mandating charging facilities at every petrol station and is penalising automakers for the production of petrol and diesel vehicle cars.

Meanwhile, China is targeting a 25 per cent penetration rate of new energy vehicles by 2025 and has implemented a range of stimulus packages to facilitate this.

Galaxy said that while current lithium pricing was expected to delay new mines and expansion projects, it expected its Sal de Vida project to enter production right before the anticipated deficit in lithium supply emerged.


The small cap ASX lithium advancers

At the smaller end of the market, Core Lithium (ASX:CXO) is completing the acquisition of the Bynoe lithium project from Liontown Resources (ASX:LTR) by making a final payment of $1.5m.

Bynoe contributes to the company’s recent definition of a 15-million-tonne resource grading 1.3 per cent Li2O at the broader Finniss project along with a reserve of 5.7 million tonnes that supports a seven-year mine life.

It also provides Core with 100 per cent access to the Greenbushes process water dam.