Mongolia's law banning mining in the country's river and forest areas is necessary to protect the mineral-rich Asian country's environment and herdsmen's livelihoods, President Tsakhia Elbegdorj said on Monday.

Half of the territory is covered by exploration licenses. I think that's enough, he said in an interview in New York on the sidelines of the United Nations General Assembly.

We have to save our wealth (for) our next generation, he said of his 2009 suspension of approvals of all new mining projects until comprehensive new regulations are drawn up.

Elbegdorj said fish were dying off, biodiversity was threatened and the nomadic herdsman of Mongolia were suffering illness from drinking water polluted by mining.

I usually listen to our public. If they see something critical, we have to check that, he said.

The need for more public consultation also governs Mongolia's handling of the Tavan Tolgoi project, believed to be the world's largest coking coal deposit. Mongolia is negotiating over a disputed decision to award the mine to China's Shenhua, U.S.-based Peabody and a mysterious Russian-Mongolian consortium.  

(After) we checked with our laws and drafts of the agreement and checked our interest, we decided to look at it more carefully, and now we are beginning that process ..., the negotiation with foreign countries, said Elbegdorj.

He declined to give a timeline for the negotiations or say whether any of those three firms would be among final bidders.

An initial public offering of as much as $15 billion for the mine's eastern block was still on track, Elbegdorj said.

They are now doing some paperwork. I think it will be done soon, he said, adding that New York was under consideration as one of the cities where the initial public offering would be held, along with London, Ulan Bator and Hong Kong.

Hundreds of foreign firms have coveted Mongolia's rich and mostly untapped deposits of coal, copper, gold and uranium. But legal and political uncertainties cast a shadow over their investments, and analysts worry that the country could lose out.

Elbegdorj acknowledged that shifting policies had created problems and dented the confidence of foreign investors.

But losing the confidence of your people is a bigger problem, he said.