SEOUL (Reuters) -South Korea's SK Group will invest around 7 trillion won ($5.11 billion) including $4 billion from Amazon Web Services, Amazon's ( AMZN ) cloud services provider, to build a data centre in the southern city of Ulsan, the Science Ministry said on Friday.

The AI data centre, which will be the country's largest, will break ground in September and be fully operational with a capacity of 100 megawatts by 2029, the ministry said in a statement.

SK Group Chairman Chey Tae-won said he planned to expand the data centre's capacity to one gigawatt in the future and make it a global hub that handles domestic AI demand during a meeting attended by President Lee Jae Myung and tech CEOs.

Artificial intelligence was crucial for South Korea's growth, he said.

"It may set a good example that South Korea's high-tech industry is possible not only in the metropolitan area but also in the provinces," Lee said.

South Korea's AI-related stocks on Friday extended a rally on policy optimism, with SK Hynix ( HXSCF ) rising more than 3%, Kakao surging 11%, and LG CNS gaining 9%, leading the benchmark KOSPI above a key milestone of 3,000 points for the first time in 3-1/2 years.

The official announcement follows media reports earlier this month that SK Group and Amazon Web Services were building a data centre in South Korea.

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