Before the reclamation of the bay, Cheoy Lee Shipyard operated in the bay from 1964 to April 2001. The Government acquired the land from the owners for the sum of HK$1.48 billion, and paid HK$22.7 million in additional compensation, according to a Public Works Subcommittee paper from May 2002.
The Government had not realised that its operations accumulated 30000 cubic metres of soil contaminated with dioxin, heavy metals, and hydrocarbons. The solid waste was dug up and transferred to To Kau Wan on the north shore of Northeast Lantau for temporary processing, and finally incinerated at the Chemical Waste Treatment Centre on the Tsing Yi Island amid protests by residents. The total cleanup cost not taken into account at the time of acquisition was estimated at 450 million Hong Kong dollars.