By Chris Mfula and MacDonald Dzirutwe
LUSAKA (Reuters) - Zambian opposition leader Michael Sata, a critic of Chinese investment, was sworn in as president on Friday after an upset poll victory that ushered in a smooth handover of power in Africa's biggest copper producer.
Sata, 74, swept to victory on the back of voters looking for change in a country that has seen its economy grow but who felt the riches from its mines had not made their way to the people or created enough jobs.
He tried to reassure foreign mining firms their investments would be safe but warned they needed to improve conditions for their Zambian workforce.
"Foreign investment is important to Zambia and we will continue to work with foreign investors who are welcome in the country ... but they need to adhere to the labor laws," Sata said after being sworn in following his upset victory over former leader Rupiah Banda.
Zambians celebrated from the predawn hours of Friday after Sata was declared the winner and painted the capital in the green and white colours of his Patriotic Front Party.
"We should not allow violence to separate us. The gap between the rich and the poor is growing wider and we need to address that. I stand by the promise to change Zambia within 90 days," Sata said, pledging to slash the size of government and tackle corruption.
In a continent where leaders are often reluctant to give up power, incumbent Rupiah Banda tearfully conceded defeat, saying the people had spoken. His Movement for Multi-party Democracy (MMD) party has run Zambia since one-party rule ended in 1991.
"Now is not the time for violence and retribution. Now is the time to unite and build tomorrow's Zambia together," he told a news conference.
Election monitors from the European Union and regional grouping SADC declared the vote free and fair although the process was marred by violence after protests broke out over the slow release of results.
Sata, nicknamed "King Cobra" because of his sharp tongue, toned down his rhetoric against foreign mining firms, especially from China, in the closing stages of the six-week campaign but his victory could still make investors nervous.
Zambia's kwacha fell 2.9 percent to a 14-month-low of 5,150 against the dollar after Sata's victory and traders said it would remain vulnerable until he gave clearer indications on his future policies.
MINING RULES OVERHAUL
Analysts said Sata would review contracts with foreign companies struck by Banda's administration, and could overhaul mining, trade and banking regulations.
"Sata's upset victory will likely usher in a new era for a resource-nationalist mining sector policy," said Sebastian Spio-Garbrah, an analyst at Africa consultancy DaMina Advisors.
"Sata has said that his government will insist that foreign miners keep all their export forex revenues within the country and only repatriate profits. He has called for a new revamp of the country's mining code and a review of mining contracts signed under Banda."
Sata told Reuters last week he would maintain strong commercial and diplomatic ties with China and would not introduce a minerals windfall tax, but implied he might impose some form of capital controls to keep dollars in the country.
Chief Justice Ernest Sakala declared him the winner after he received 1,150,045 votes compared with Banda's 961,796 with 95.3 percent of constituencies counted.
Sata has enjoyed a long and varied career that included stints in motor vehicle assembly plants in Britain and as a porter with British Rail before becoming a grassroots political activist under first president, Kenneth Kaunda.
He likes to keep a statue of a rearing snake on his desk as a reminder to enemies of his sharp tongue.
"At long last the will of the people has been respected. The people wanted change," said street vendor Peter Musonda.
Sata secured support among the youth on the back of campaign promises to create jobs and his criticism that Banda's government failed to let ordinary Zambians share in the proceeds from the country's copper mines.
U.S. President Barack Obama congratulated Sata for a historic victory.
"The hard work of a living democracy does not end when the votes are tallied and the winners announced; instead it offers the chance to reconcile and to advance greater security and prosperity for its people," Obama said in a statement.
China welcomed the outcome of the vote and said it would continue fostering cooperation.
Its companies have become major players in Zambia's $13 billion economy, with total investments by the end of 2010 topping $2 billion, according to data from the Chinese embassy.
But Sata has accused Chinese mining firms of slave labor conditions with scant regard for safety or the local culture.
(Additional reporting by Ed Cropley in Johannesburg and Sabrina Mao in Beijing; Writing by Marius Bosch; Editing by Jon Herskovitz and Michael Roddy)