Environmentalists, indigenous groups and local residents lost a protracted court battle to halt the bidding process for the giant Belo Monte dam, projected to be the world's third-largest.

Brazil awarded the tender Tuesday to Norte Energia, a consortium led by a subsidiary of state electricity company Electrobras, which will hold a 49.98-percent stake in the project.

"Boats are in the process of leaving and we hope to occupy the territory tomorrow (Thursday). We will build a permanent village there and will not leave so long as the project is on," chief Luiz Xipaya told AFP.

"The indigenous people feel threatened by this project and are very agitated," said Xipaya, who presides over a council of elders.

Around 150 Brazilian Indians will initially set up camp at the dam site, but Xipaya warned that "we would like to number 500 by the end of the month and ask for reinforcements.... Our goal is to place 1,000 Indians there."

Greenpeace estimates that 500 square kilometers (193 square miles) of Amazon rainforest will be flooded and says the dam's construction will also divert a stretch of the Xingu River into an area that is home to up to 30,000 families.

The activist group led a demonstration Tuesday outside the gates of electric energy agency Aneel in Brasilia to protest the award of the tender, while the Amazon Watch organization said thousands of people demonstrated in nine Brazilian cities against the plans.

The dam has some heavyweight opponents with "Avatar" director James Cameron and star Sigourney Weaver giving their backing and drawing parallels with the natives-versus-exploiters storyline of the blockbuster Hollywood movie.

The regional justice ministry in the state of Para tried to stall tenders for the 11-billion-dollar-plus Belo Monte project, calling the dam "an affront to environmental laws."

It said too many questions remained over how the massive project would affect flora and fauna in the region and what would become of the families who would have to be relocated.

Brazil's government had been pushing the massive project for more than 20 years.

The government of President Luiz Inacio Lula da Silva remained determined to push through the dam, calling it essential to its plans to boost energy production nearly three-fold over the next two decades in Brazil, Latin America's biggest economy.

Authorities would be hard-pressed to get the new dam system up and running before two major global events looming in Brazil's future: the 2014 World Cup football tournament followed by the 2016 Olympic Games.

Opponents said they were standing firm.

"We will not get discouraged. We will continue to demonstrate and indigenous communities will occupy the area," Renata Pinheiro of the Xingu Vivo movement, which brings together residents, local groups and environmentalists, told AFP.

For construction costs of 11.2 billion dollars, Belo Monte is expected to be able to produce 11,000 megawatts, which could supply 20 million homes with power.

The dam would be the third-largest after China's Three Gorges facility, which produces 18,000 megawatts, and Brazil's Itaipu dam (14,000 MW) in the south on the border with Paraguay.

Belo Monte has been defended by some locals who hope to benefit from the estimated 18,000 direct jobs and 80,000 indirect jobs that the government says the project will create.

Hydro-electric power accounts for 73 percent of the energy produced by Brazil.

But its energy grid is fragile, as evidenced by a massive blackout last November which left more than a third of Brazil's 190 million people without power for several hours.

The power failure was seen as an embarrassment for Lula's administration and led to questions about Brazil's energy stability for the 2016 Olympics to be hosted by Rio de Janeiro.

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