A natural gamma-ray gauge has been devel- oped for discriminating overburden and inter- seam sediment from low ash coal located on a moving conveyor belt. It is based on the difference in natural radioactivity of the sediment and overburden compared with the low ash coal, which is detected with a highly ef- ficient "Polyscin" NaI(T1) gamma-ray detector located underneath the conveyor. Gauges have been successfully installed on the bucket wheel boom of the two coal dredgers at the Loy Yang Open Cut. They are used to warn dredger operators that they are digging overburden or sediment and that action is required to avoid the sediment or divert it to the waste dump rather than send it to the coal bunkers at the power station.