* Project planned in northern Centinela Mining District * Oxidos Encuentro to begin initial production in 2016 * Group on track to produce 700,000 tonnes copper this year SANTIAGO, Dec 6 (Reuters) - Chilean miner Antofagasta Minerals has submitted its $600 million Oxidos Encuentro copper project for environmental approval in Chile, the company said on Thursday. The London-listed miner hopes the project, in the Centinela Mining District in northern Chile, will start being built in 2014 and begin initial production in 2016. Output is seen at an average of 50,000 tonnes of copper cathodes per year over eight years. "The development of the Centinela Mining District consolidates our position in that zone where the group had been working for more than two decades. The synergies between the Oxidos Encuentro project, El Tesoro and Esperanza will allow the sector's mining potential to be re-galvanized," project manager Francisco Walther said in a statement. World No.1 copper miner Chile produces around a third of the world's copper but dwindling ore grades at ageing mines, legal setbacks to key projects and high energy costs have taken some shine off the mining powerhouse. Environmental and social groups are increasingly opposing major power and mining projects in Chile and are gaining traction in courts. Oxidos Encuentro plans to use exclusively ocean water, Antofagasta said. Antofagasta's third-quarter copper output rose almost 9 percent year on year, boosted by improved production at its trouble-plagued flagship Esperanza mine and steadier volumes elsewhere. The group has said it on track to meet its full-year target of 700,000 tonnes, having produced 515,800 tonnes in the first nine months of the year.