There has been growing interest in the use of magnetorheological fluids to improve displacement efficiency of fluids (drilling fluids, spacer fluids, cement slurries) in the eccentric casing annuli. When magnetic particles are mixed with the cement slurry for improved displacement, they provide an excellent opportunity for sensing the presence and quality of cement in the annulus. This work focuses on using sophisticated 3D computational electromagnetics to simulate the use of a magnetic cement slurry for well cement monitoring. The main goal is to develop a new tool, which is capable of locating magnetic cement slurry that is placed behind a stainless steel casing. An electromagnetic coil was used to generate a magnetic field inside the borehole. It was found that when a current was passed through the electric coils, magnetic field lines passed through the stainless steel casing, the cement annulus and the rock formation. Three sensors were placed inside the cased borehole and the magnetic field strength variations were observed at these locations. Various factors that have a significant influence on zonal isolation were considered. These include, effect of debonding between casing and cement annulus, effect of changing annuli thickness, influence of a fracture in the rock formation, effect of changing magnetic permeability of cement and finally influence of annuli eccentricity. Based on the results shown in the paper along with the next generation of supersensitive magnetic sensors that are being developed, the magnetic approach appears to be a viable alternative for evaluating the quality of the cement annulus to ensure good zonal isolation.