The People's Bank of China, the country's central bank, has approved the first swap contracts for iron ore and thermal coal as a hedge against price volatility.

The new contracts will be priced in the yuan and trade over the counter, with clearing handled by the Shanghai Clearing House, the report cited two industry sources familiar with the matter as saying.

The swap contract for iron ore with 62 percent content will be priced against a combination of reference indices published by information providers CUSteel, China Beijing International Mining Exchange and Mysteel, it said.

The thermal coal contract will be based on the government-backed Bohai-Bay Rim steam coal index, according to the report.