Does mulch such as “shredded hardwood” actually rob the soil of nutrients?
As Hairy Caterpillar and others have observed, mulch can rob the soil of nitrogen so you need to mix it with a source of nitrogen, such as manure, or plant growth will be inhibited. Another issue affecting plant growth, with using chopped wood mulch, is that it can contain chemicals called terpenes. These are toxic to plants and inhibit plant growth very strongly – a phenomenon used in nature in a process called allelopathy. Terpenes are particularly found in aromatic type woods such as eucalyptus or conifers. I found that water leeching through such mulch into my vegetable beds stopped or inhibited growth for two or three metres around the water run-off. Plant height was proportional to the distance from the pile of mulch. I now put this down to the terpenes. I have yet to discover how long the terpenes persist but it is more than one year. I originally, and incorrectly, thought this was due to the nitrogen depletion issue.